oversight

The Boston Office of Public Housing Did Not Provide Adequate Oversight of Environmental Reviews of Three Housing Agencies, Including Reviews Involving Recovery Act Funds

Published by the Department of Housing and Urban Development, Office of Inspector General on 2014-02-07.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

OFFICE OF AUDIT
REGION 6
FORT WORTH, TX




                  Office of Public Housing
                        Boston, MA

        Public Housing Capital Fund and American
          Recovery and Reinvestment Act of 2009
                 Environmental Reviews




2014-FW-0001                                 February 7, 2014
                                                        Issue Date: February 7, 2014

                                                        Audit Report Number: 2014-FW-0001




TO:            Marilyn B. O’Sullivan,
               Director of the Boston Office of Public Housing, 1APH

               //signed//
FROM:          Gerald R. Kirkland
               Regional Inspector General for Audit, Fort Worth Region, 6AGA


SUBJECT:       The Boston Office of Public Housing Did Not Provide Adequate Oversight of
               Environmental Reviews of Three Housing Agencies, Including Reviews
               Involving Recovery Act Funds


    Attached is the U.S. Department of Housing and Urban Development (HUD), Office of
Inspector General’s (OIG) results of our review of the Boston Office of Public Housing’s
oversight of environmental reviews pertaining to the Public Housing Capital Fund program.

    HUD Handbook 2000.06, REV-4, sets specific timeframes for management decisions on
recommended corrective actions. For each recommendation without a management decision,
please respond and provide status reports in accordance with the HUD Handbook. Please furnish
us copies of any correspondence or directives issued because of the audit.

    The Inspector General Act, Title 5 United States Code, section 8M, requires that OIG post its
publicly available reports on the OIG Web site. Accordingly, this report will be posted at
http://www.hudoig.gov.

   If you have any questions or comments about this report, please do not hesitate to call me at
(817) 978-9309.
                                           February 7, 2014

                                           The Boston Office of Public Housing Did Not
                                           Provide Adequate Oversight of Environmental
                                           Reviews of Three Housing Agencies, Including
                                           Reviews Involving Recovery Act Funds

Highlights
Audit Report 2014-FW-0001


 What We Audited and Why                    What We Found

We audited the U.S. Department of          The Boston Office did not provide adequate oversight
Housing and Urban Development’s            to three public housing agencies to ensure that the
(HUD) Boston Office of Public              responsible entities properly completed and
Housing as part of a nationwide audit of   documented environmental reviews. Further, the
HUD’s oversight of environmental           Boston Office did not maintain sufficient internal
reviews. We selected the Boston Office     control records. These conditions occurred because
based on our risk assessment. Our audit    the Boston Office thought that the Office of
objectives were to determine whether       Community Planning and Development was
the Boston Office’s oversight of public    responsible for monitoring responsible entities for
housing environmental reviews within       compliance with requirements and because the Boston
its jurisdiction ensured that (1) the      Office elected not to follow the Office of Public
responsible entities performed the         Housing’s guidance. As a result, three housing
required reviews and (2) HUD did not       agencies spent more than $85 million, including more
release funds until all required           than $39 million in Recovery Act grant funds, for
documents were submitted.                  projects that either did not have required
                                           environmental reviews or the environmental reviews
                                           were not adequately supported.
 What We Recommend

Our recommendations include requiring
three housing agencies to (1) repay
HUD, for transmission to the U.S.
Treasury, more than $4.8 million and
providing support or repaying more
than $34 million in 2009 American
Recovery and Reinvestment Act funds,
(2) provide support for or repay HUD
more than $45 million in Public
Housing Capital Fund grant funds, and
(3) take available actions against three
housing agencies and their responsible
entities. To correct systemic
weaknesses identified in this report, we
will make recommendations to HUD
headquarters officials in an upcoming
nationwide audit report.
                           TABLE OF CONTENTS

Background and Objectives                                                     3

Results of Audit
      Finding: The Boston Office of Public Housing Did Not Provide Adequate
               Oversight of Environmental Reviews                             4

Scope and Methodology                                                         15

Internal Controls                                                             17

Appendixes
A.    Schedule of Questioned Costs                                            19
B.    Auditee Comments and OIG’s Evaluation                                   20
C.    Criteria                                                                27




                                           2
                       BACKGROUND AND OBJECTIVES

In January 1970, Congress passed the National Environmental Policy Act of 1969 (NEPA). The
objective of this legislation was to establish a national policy that would encourage productive and
enjoyable harmony between man and his environment and to promote efforts that will prevent or
eliminate damage to the environment and biosphere and stimulate the health and welfare of man.
To carry out the policy set forth in the Act, Congress directed that it is the continuing responsibility
of the Federal Government to improve and coordinate Federal plans, functions, programs, and
resources to the end that the Nation may attain the widest range of beneficial uses of the
environment without degradation, risk to health or safety, or other undesirable and unintended
consequences. Further, Congress authorized and directed all agencies of the Federal Government to
identify and develop methods and procedures to ensure that the agencies complied with
environmental policies, regulations, and public laws of the United States.

To further the purpose and policy of NEPA, the President issued Executive Order 11514, Protection
and Enhancement of Environmental Quality, on March 5, 1970. Based on the executive order, the
heads of Federal agencies are required to continually monitor, evaluate, and control their agencies’
activities so as to protect and enhance the quality of the environment. In addition, Federal agencies
are required to review their agencies’ statutory authority, administrative regulations, policies, and
procedures, including those relating to loans, grants, contracts, leases, licenses, or permits, to
identify any deficiencies or inconsistencies that prohibit or limit full compliance with the purposes
and provisions of the Act.

The U.S. Department of Housing and Urban Development (HUD) responded to NEPA and
Executive Order 11514 by developing 24 CFR (Code of Federal Regulations) Part 58,
Environmental Review Procedures for Entities Assuming HUD Environmental Responsibilities,
which allows HUD to transfer responsibility for environmental reviews to State and local
governments. This responsibility includes the environmental review, decision making, and
action that would otherwise apply to HUD under NEPA and other provisions of law. However,
it also requires HUD to monitor, inspect, and ensure that the environmental process decisions are
carried out during project development and implementation.

Our audit objectives were to determine whether the Boston Office of Public Housing’s oversight
of public housing environmental reviews within its jurisdiction ensured that (1) the responsible
entities performed the required reviews and (2) HUD did not release funds until all required
documents were submitted.




                                                   3
                                   RESULTS OF AUDIT


Finding: The Boston Office of Public Housing Did Not Provide
Adequate Oversight of Environmental Reviews
The Boston Office of Public Housing did not provide adequate oversight of three public housing
agencies to ensure that the responsible entities properly completed and documented
environmental reviews. Further, the Boston Office did not maintain sufficient internal control
records. These conditions occurred because the Boston Office thought that the Office of
Community Planning and Development (CPD) was responsible for monitoring responsible
entities for compliance with requirements and because the Boston Office elected not to follow
the Office of Public Housing’s internal guidance. As a result, three housing agencies spent more
than $85 million, including more than $39 million in Recovery and Reinvestment Act of 2009
grant funds, for projects that either did not have required environmental reviews or the
environmental reviews were not adequately supported.


    The Boston Office Did Not
    Provide Adequate Oversight To
    Ensure Environmental
    Compliance

                 We reviewed three public housing agencies under the Boston Office’s
                 jurisdiction. There were significant deficiencies at each housing agency.
                 Although the Boston Office staff reviewed responsible entity environmental
                 review records, it failed to discern that the reviews did not meet regulatory
                 requirements. Instead, it accepted the responsible entities’ reviews at face value
                 and released funding to the housing agencies.

                 The Boston Office Did Not Provide Adequate Oversight To Ensure That the
                 Responsible Entities Properly Completed Environmental Reviews for All Years
                 Because the Boston Office did not provide adequate oversight, it did not
                 determine that a contractor improperly performed environmental reviews for the
                 Boston Housing Authority and made determinations of compliance with
                 requirements. While a housing agency may use consultants to perform a
                 significant portion of the environmental review, only HUD or a responsible entity
                 may perform the reviews and determine compliance with requirements. A
                 responsible entity assumes the responsibility for conducting the environmental
                 reviews, decision making, and other actions that would otherwise apply to HUD
                 under NEPA and other provisions of law that further the purposes of NEPA. 1 The
                 environmental review process consists of all actions that a responsible entity must

1
     24 CFR 58.4(a)


                                                  4
                take to determine compliance. 2 The Boston Office did not determine that the City
                of Boston failed to meet the following requirements

                     •   Assume responsibility for decision making, 3
                     •   Review consultant work to ensure proper compliance, 4
                     •   Identify itself as the entity to receive public comments, 5
                     •   Reevaluate substantial changes in projects, 6
                     •   Maintain the environmental review record, 7 and
                     •   Inform HUD if it does not have the capacity to perform the environmental
                         reviews for the housing agency. 8

                The City of Boston, as the responsible entity, did not perform the environmental
                reviews for the Boston Housing Authority. The City’s compliance manager stated
                in an email to the housing agency that it did not have the capacity to perform the
                reviews directly but would train a designated housing authority employee.
                According to requirements, 9 a responsible entity that believes it does not have the
                legal capacity to carry out the environmental responsibilities must notify the local
                HUD office for further instructions. However, this requirement was not met.
                Rather, the Boston Housing Authority assumed all responsibility for its
                environmental reviews. Further, it used a contractor to perform the reviews and
                make the compliance determinations. Therefore, the housing agency and
                responsible entity improperly implemented the review process. Additionally, the
                mayor of Boston, as the certifying officer, signed the form HUD-7015.15,
                certifying that his office had fully carried out its responsibilities for environmental
                review, decision making, and action related to the projects set forth. The mayor
                further certified that his office assumed responsibility for and complied with
                NEPA, the environmental procedures, and statutory obligations of the laws cited
                in 24 CFR 58.5 and 58.6 on projects for which it did not perform the
                environmental review.

                The Nashua Housing Authority performed the environmental reviews for its 2011
                and 2012 Capital Fund grants and determined the level of environmental
                compliance. While the housing agency is allowed to perform a portion of the
                review, 24 CFR 58.4(a) requires the responsible entity to complete the review and
                determine environmental compliance. If the City of Nashua, the responsible
                entity, had performed a complete review to determine environmental compliance,


2
    24 CFR 58.30(a)
3
    24 CFR 58.4(a)
4
    24 CFR 58.30
5
    24 CFR 58.43(c)
6
    24 CFR 58.47(a)(1) and (b)(3)
7
    24 CFR 58.38
8
    24 CFR 58.11(a)
9
    Ibid.


                                                  5
it should have found that the environmental review records submitted by the
housing agency were incomplete and lacked supporting information.

The New Bedford Housing Authority’s 2009 Recovery Act environmental review
did not comply with Federal regulations. The Authority did not provide its 2009
Recovery Act projects to the City of New Bedford for environmental review. A
Boston Office public housing facilities management specialist in an email dated
April 8, 2009, stated to the former executive director of the housing agency that
“. . . if New Bedford is to say the environmental was covered with your 5-year
CFP Plan as part of your PHA Plan, that is fine. However, please write us to
indicate this.” The City of New Bedford director told us that the 2008 review he
performed applied only to the City’s 2008 Capital Fund grant – not the 5-year
plan. He further explained that the housing agency decided to use its 2008
environmental review to cover its 2009 Recovery Act Capital Fund grant. In
addition, the agency’s executive director told the Boston Office that the agency
did not propose any new capital elements. Therefore, the components in the
agency’s 2007, 2008, 2009, or 5-year plan would cover the 2009 Recovery Act
grant. However, HUD reported in its 2010 monitoring report for the housing
agency’s 2009 Recovery Act grant that the budget contained work items that were
not part of an approved budget or 5-year plan. According to 24 CFR 58.30, the
environmental review process consists of all the actions that a responsible entity
must take to determine compliance, not the housing agency or HUD field office.

The Boston Office Did Not Provide Adequate Oversight to Ensure That the
Responsible Entities Properly Documented Environmental Reviews for All Years
During its reviews of responsible entity environmental review records, the Boston
Office staff did not determine that responsible entities failed to submit required
documentation, make required levels of environmental determinations, sign or
date their compliance review checklists, properly identify their project
descriptions, or adequately document support for their environmental reviews.
According to 24 CFR 58.38, the responsible entity must maintain a written record
of the environmental review. The record must contain all of the environmental
review documents, public notices, and written determinations or findings as
evidence of the review, decision making, and actions. Further, documents must
describe the project, evaluate the effects of the project on the environment, and
document compliance with applicable statutes and authorities. Although the
requirements were not met, the Boston Office released funds to the housing
agencies.

The City of Nashua concluded that the Nashua Housing Authority’s projects were
categorically excluded, subject to 24 CFR 58.5, and could be converted to exempt
status, meaning that public notifications and requests for release of funds and
certification were not required. Similarly, the City of New Bedford concluded
that the New Bedford Housing Authority’s 2011 and 2012 Capital Fund projects
were categorically excluded, subject to 24 CFR 58.5, and could be converted to
exempt status. However, neither housing agency nor responsible entity had

                                 6
                 supporting documentation to show that they met compliance requirements or that
                 no mitigating factors existed that required further compliance. Therefore, we
                 were unable to determine whether public notifications or requests for release of
                 funds and certification should have been required or whether the projects could
                 convert to exempt. For exempt activities, the responsible entity does not need to
                 undertake an environmental review, consultation, or other action under NEPA and
                 the other provisions of law or authorities cited in 24 CFR 58.5

                 The Boston Office did not follow requirements when it approved and released
                 funds to the New Bedford Housing Authority before the responsible entity
                 documented in writing its environmental determination. The requirements at 24
                 CFR 58.22 state that a recipient may not commit HUD assistance for any activity
                 or project until the responsible entity has documented its environmental
                 determination and HUD has approved the recipient’s Request for Release of
                 Funds and Certification. If a project is exempt, the recipient may perform the
                 activity immediately after the responsible entity has documented its
                 determination. The housing agency inappropriately withdrew more than $22
                 thousand from its 2012 Capital Fund grant for salaries and benefits before the
                 responsible entity made an exempt determination and placed the decision on
                 record as required.

                 The Boston Housing Authority’s environmental records did not contain detailed
                 project descriptions for the projects and the activities that the housing agency
                 determined to be part of the projects as required by 24 CFR 58.38(a)(1). Project
                 descriptions should detail the (1) location so the public can locate the site; (2)
                 purpose and need to describe what is being done and why it is necessary; (3) area,
                 which provides the character, features, resources, and trends; and (4) activity
                 description that gives complete details about what will be done, the type of
                 project, and the timeframe for implementation.

                 Further, neither the Nashua Housing Authority’s nor the New Bedford Housing
                 Authority’s environmental records contained complete project descriptions.
                 Specifically, the responsible entities did not provide significant and relevant
                 information, including the number of buildings, number of units, age of
                 structures, location maps, or site photographs. The environmental review record
                 must describe the project and the activities that the recipient has determined to be
                 part of the project. 10 Further, HUD’s environmental Web site 11 states that a
                 complete and clear project description is the first step in the environmental review
                 process. The project description should provide location-specific information and
                 geographic boundaries, as well as a delineation of all activities included in the
                 overall scope of the project. However, the housing agency and the responsible
                 entity provided only a street address and work items such as “replace windows”
                 and “remove and replace existing siding.”

10
     24 CFR 58.38
11
     Web site is http://portal.hud.gov/hudportal/HUD?src=/program_offices/comm_planning/environment/review.


                                                      7
                 None of the records for the Nashua Housing Authority’s Recovery Act or 2011
                 and 2012 Capital Fund grants contained required compliance documentation
                 supporting the items identified on the statutory checklists. For example, the
                 statutory checklist requires compliance with Section 106 of the National Historic
                 Preservation Act. However, the City of Nashua unilaterally determined that
                 developments were “not considered historic properties,” without providing a basis
                 to support its determination. The City of Nashua was required to consult with the
                 State historic preservation officer regardless of the properties’ historical status. 12
                 The support could have included evidence of a documented finding sent to the
                 State historic preservation officer or a supported determination that the projects
                 complied with a State historic preservation officer programmatic agreement.

                 Further, the New Bedford Housing Authority’s 2011 and 2012 Capital Fund grant
                 environmental review records did not comply with records requirements. 13 The
                 records contained a statutory checklist that did not include the supporting basis or
                 supporting documentation to substantiate the items that the records addressed,
                 such as historic preservation, contamination and toxic substances, floodplain
                 management and flood insurance, and noise abatement and control. For example,
                 the City of New Bedford referenced a phase I or phase II environmental
                 assessment as a source but did not provide pertinent information, such as what
                 developments were studied, who conducted the studies, when or where the studies
                 were conducted, and the studies’ specific results and conclusions. These
                 documents are considered “proprietary” source documentation and must be
                 included in their entirety in the environmental review record. 14

                 The Boston Office Did Not Ensure That Agencies Verified and Documented
                 Compliance Requirements
                 The housing agencies and their responsible entities did not address or provide
                 documentation supporting their compliance with any of the following
                 requirements:

                     •    Historic preservation - The housing agencies and their responsible entities
                          did not comply with Section 106 of the National Historic Preservation Act,
                          which requires an agency official to identify historic properties, in
                          consultation with the State historic preservation officer, and determine the
                          intended effect on historic properties. Consultation is required even if the
                          responsible entity believes that no historic properties are present or that
                          historic properties may be present but the undertaking will have no
                          adverse effect upon them.
                     •    Coastal zone management - The housing agencies and their responsible
                          entities did not comply with the Massachusetts Office of Coastal Zone

12
     36 CFR 800.4(d)(1)
13
     24 CFR 58.38
14
     Ibid.


                                                    8
    Management as watersheds make up the entire eastern half of the State.
    Contaminants, such as asbestos, can be released into the air from activities
    such as roof and heating, ventilation, and air conditioning system
    replacements. Further removal and replacement of underground storage
    tanks can release contaminants into the soil and groundwater, which can
    be carried by rivers and streams, or through drainage systems to the coast.
•   Air quality - The housing agencies and their responsible entities did not
    comply with air quality requirements to determine whether hazardous air
    pollutants were in the building materials that were replaced. Failure to
    properly identify, abate, dispose of, and perform other required actions
    regarding asbestos before beginning renovation activities may create
    health hazards.
•   Noise control - The housing agencies and their responsible entities did not
    comply with noise control requirements for major rehabilitation or
    conversion projects to determine whether there was a need for noise
    reduction features.
•   Contamination and toxic site hazards - The housing agencies and their
    responsible entites did not comply with requirements regarding
    contamination and toxic site hazards. One housing agency’s properties
    were listed as disposal sites by the Massachusetts Department of
    Environmental Projection. These sites were found to have contamination
    hazards, such as oil and hazardous materials, which should have been
    addressed to ensure that no remediation work was required. The other
    housing agencies provided no supporting documentation to validate
    statements, such as “none of the existing developments have known toxic
    chemicals or other environmental hazards on site,” made in the
    environmental review records.
•   Environmental justice - The housing agencies and their responsible
    entities did not comply with environmental justice requirements.
    Environmental justice requirements are designed to focus Federal attention
    on the environmental and human health conditions that any of the
    compliance factors may have on minority and low-income communities.
    Any unmitigated adverse impact that can occur with such things as
    contamination or toxic sites, noise, and air quality could result in an
    environmental justice compliance violation.
•   Floodplain management and flood insurance - The housing agencies and
    their responsible entities did not always comply with floodplain
    management or flood insurance requirements. One location was identified
    by the Federal Emergency Management Agency (FEMA) as being in a
    special flood hazard area. The housing agency provided no
    documentation showing that it met the requirements of having obtained
    and maintained flood insurance at the development. Similarly, the other
    two housing agencies provided no supporting documentation to verify that
    their properties were not in a flood zone.



                             9
   •   Sole-source aquifers, wetland protection, endangered species, wild and
       scenic rivers, farmland protection, explosive and flammable operations,
       and airport clear zones - The housing agencies and their responsible
       entities on most occasions provided no documentation supporting that the
       above compliance factors were addressed and met requirements. If these
       compliance factors did not require further review and the specific projects
       met requirements, documentation supporting that they were addressed
       must be maintained in the environmental review record.

Because these compliance requirements were not verified, the residents had no
assurance that they were not exposed to unnecessary risk, contamination,
pollution, or other adverse environmental effects.

Necessary Follow-up Reviews Were Not Performed
The Boston Housing Authority’s consultant marked the statutory checklist for the
Foley property “further review required” because the property included areas that
FEMA identified as having special flood zone hazards. A further review was
required to determine whether the property needed additional flood insurance.
However, the environmental record did not contain documentation showing that a
further review was performed or that the housing agency obtained or maintained
flood insurance on the property. According to 24 CFR 58.6, the responsible entity
must address the Flood Disaster Protection Act of 1973 and Section 582 of the
National Flood Insurance Reform Act of 1994 in the environmental review record
regardless of whether the activities are exempt or categorically excluded.

The consultant also marked several other compliance factors “further review
required,” on the Boston Housing Authority’s statutory checklist, but neither the
consultant, the housing agency, nor the responsible entity performed further
reviews. The Boston Housing Authority director told us that the Authority should
have marked “not applicable” instead of “further review required” on the
compliance factors since the funds were used for system replacement projects.
She further stated that the housing agency did not have a formal review or
documentation supporting that it had performed the next step (further review) of
the Part 58 process for system replacement projects. Specifically, 24 CFR
58.35(a)(1) states that some activities are categorically excluded under NEPA but
are subject to review under authorities listed in 24 CFR 58.5. Some of these
activities include acquisition, repair, improvement, reconstruction, or
rehabilitation of public facilities when the facilities and improvements are in place
and will be retained in the same use; for example, replacement of water or sewer
lines, reconstruction of curbs and sidewalks, or repaving of streets.

The Boston Office Did Not Ensure That Operating Costs Met Environmental
Requirements
The Boston Office did not ensure that funds transferred to housing agency
operating accounts met environmental requirements. Staff stated that there was



                                 10
                 no need to question the funds once they were transferred and that the housing
                 agencies did not need to record what the funds were used for.
                 However, 24 CFR 990.116 provides that the environmental review procedures of
                 NEPA and the implementing regulations at 24 CFR Parts 50 and 58 are applicable
                 to the operating fund program. Further, the annual contributions contract 15
                 prohibits any costs incurred as part of the development or modernization costs
                 from being included in operating expenditures. Responsibility for determining
                 whether operating funds meet environmental requirements is determined by the
                 type and nature of the projects or activities for which the costs were incurred and
                 not on the characterization of funds, such as capital or operating.

                 The Boston Office Did Not Effectively Monitor Housing Agencies or Responsible
                 Entities
                 The Boston Office did not effectively monitor the housing agencies or the
                 responsible entities for environmental compliance. Further, the Boston Office
                 itself had not been monitored for compliance. According to the Boston Office
                 deputy director, the office had not monitored housing agencies to ensure
                 compliance because there was not enough staff or funding. However, according
                 to 24 CFR 58.77(d), HUD intended to conduct in-depth monitoring and exercise
                 quality control (through training and consultation) over the environmental
                 activities performed by responsible entities at least once every 3 years. Further,
                 Executive Order 11514 required Federal agencies to continually monitor,
                 evaluate, and control their agencies’ activities to protect and enhance the quality
                 of the environment.

     The Boston Office Did Not
     Maintain Sufficient Internal
     Control Records

                 The Boston Office did not maintain tracking logs or separate files for each
                 housing agency as required by HUD’s Field Office Environmental Review
                 Guidance. The guidance required, at a minimum, maintaining tracking logs that
                 detailed who performed the environmental reviews; whether the form
                 HUD-7015.15, Request for Release of Funds and Certification, was received and
                 cleared; and whether HUD performed the environmental reviews directly. The
                 guidance further required maintaining a separate environmental file for each
                 housing agency.

                 The Boston Office deputy director said that the Boston Office had one combined
                 log that was most likely incomplete and not current. He also said that separate
                 environmental review files were not necessary and the office did not maintain
                 them.

15
       Form HUD-53012A


                                                 11
The Boston Office Believed
That CPD Was Responsible for
Ensuring Compliance

             The Boston Office deputy director cited section A.1.h of a notice published in the
             Federal Register on May 30, 2012, that his office believed delegated the overall
             departmental responsibility for compliance with NEPA to CPD. However,
             according to the notice’s summary, its purpose was for the Assistant Secretary for
             Community Planning and Development to redelegate to the Deputy Assistant
             Secretaries and other specified HUD officials all powers and authorities necessary
             to carry out CPD programs, except those powers and authorities specifically
             excluded. The notice did not delegate authority for CPD to conduct
             environmental reviews of Office of Public and Indian Housing programs. Even if
             the notice had been interpreted to grant such authority, it was issued after most of
             the questioned environmental reviews should have been completed and certified.
             Thus, it would not have applied to the grants reviewed during the audit.

The Three Housing Agencies
Spent More Than $85 Million
for Questioned Costs

             Because the environmental reviews did not comply with requirements, the
             housing agencies incurred more than $85 million in questioned costs, including
             more than $39 million in Recovery Act funds, as detailed in table 1.

         Table 1: Questioned costs
                                Boston               Nashua        New Bedford
                               Housing              Housing          Housing
                 Year         Authority             Authority       Authority          Total
          2009 Recovery       $33,329,733           $1,169,494       $4,860,197     $39,359,424
          Act funds
          2011 capital funds   21,478,604               874,261       3,154,021      25,506,886
          2012 capital funds   17,058,105               728,596       2,989,066      20,775,767
          Total               $71,866,442            $2,772,351     $11,003,284     $85,642,077

Conclusion

             The Boston Office did not provide adequate oversight to ensure that the
             responsible entities properly completed and documented environmental reviews
             for all three public housing agencies within its jurisdiction that we reviewed.
             Thus, the Boston Office was unaware that the public housing agencies and their
             responsible entities did not properly implement environmental review
             requirements. Because the environmental reviews did not comply with


                                              12
          requirements, the housing agencies incurred more than $85 million in questioned
          costs, including more than $39 million in Recovery Act funds.

          The Boston Office was responsible for verifying that environmental reviews
          complied with requirements, conducting periodic monitoring, and providing
          training to the housing agencies and responsible entities. Since these conditions
          appeared to have been systemic, there are no recommendations in this report to
          address the causes. Rather, we plan to make recommendations to HUD
          headquarters in a future report. However, based on the results of our review of
          the three agencies, the Boston Office should review the deficiencies cited and
          implement the recommended corrective actions, including repayment of ineligible
          and unsupported costs.

Recommendations

          We recommend that the Director of the Boston Office of Public Housing require

          1A. The Boston Housing Authority and the City of Boston to provide support
              that they complied with 24 CFR Part 58 requirements for the Authority’s
              Recovery Act grant or require the housing agency to repay $33,329,733 to
              HUD for its transmission to the U.S. Treasury. Repayment must be from
              non-Federal funds.

          1B. The Boston Housing Authority and the City of Boston to provide support
              that they complied with 24 CFR Part 58 requirements for the Authority’s
              2011 Capital Fund grant or require the housing agency to repay $21,478,604
              to HUD. Repayment must be from non-Federal funds.

          1C. The Boston Housing Authority and the City of Boston to provide support
              that they complied with 24 CFR Part 58 requirements for the Authority’s
              2012 Capital Fund grant or require the housing agency to reimburse
              $17,058,105 to the Authority’s 2012 Capital Fund grant from non-Federal
              funds.

          1D. The Nashua Housing Authority and the City of Nashua to provide support
              that they complied with 24 CFR Part 58 requirements for the Authority’s
              Recovery Act grant or require the housing agency to repay $1,169,494 to
              HUD for its transmission to the U.S. Treasury. Repayment must be from
              non-Federal funds.

          1E. The Nashua Housing Authority and the City of Nashua to provide support
              that they complied with 24 CFR Part 58 requirements for the Authority’s
              2011 Capital Fund grant or require the housing agency to repay $874,261 to
              HUD. Repayment must be from non-Federal funds.



                                          13
1F. The Nashua Housing Authority and the City of Nashua to provide support
    that they complied with 24 CFR Part 58 requirements for the Authority’s
    2012 Capital Fund grant or require the housing agency to reimburse
    $728,596 to the Authority’s 2012 Capital Fund grant from non-Federal
    funds.

1G. The New Bedford Housing Authority to repay $4,860,197 in Recovery Act
    grant funds to HUD for its transmission to the U.S. Treasury. Repayment
    must be from non-Federal funds.

1H. The New Bedford Housing Authority and the City of New Bedford to
    provide support that they complied with 24 CFR Part 58 requirements for
    the Authority’s 2011 Capital Fund grant or require the housing agency to
    repay $3,154,021 to HUD. Repayment must be from non-Federal funds.

1I.   The New Bedford Housing Authority to repay $22,786 from non-Federal
      funds to its 2012 Capital Fund grant for salaries and benefits that were
      released before the responsible entity documented that activities met
      exemption requirements.

1J.   The New Bedford Housing Authority and the City of New Bedford to
      provide support that they complied with 24 CFR Part 58 requirements for
      the Authority’s 2012 Capital Fund grant or require the housing agency to
      reimburse $2,966,280 to the Authority’s 2012 Capital Fund grant from non-
      Federal funds.

1K. The housing agencies to work with their respective responsible entities and
    local HUD environmental officer to show that no harm occurred from
    completion of all of the projects or mitigate any harm that occurred.

We also recommend that the Director of the Boston Office of Public Housing

1L. Take one or more of the following actions with the three housing agencies
    and their respective responsible entities:
    • Require attendance by responsible staff and management of the housing
       agency and responsible entity at HUD-sponsored or approved training;
    • Refuse to accept the certifications of environmental compliance on
       subsequent grants;
    • Suspend or terminate the responsible entity’s assumption of the
       environmental review responsibility; and
    • Initiate sanctions, corrective actions, or other remedies specified in
       program regulations or agreements or contracts with the housing agency.




                                14
                         SCOPE AND METHODOLOGY

We conducted our audit work between October 2012 and August 2013 at the HUD Boston
Office, Boston Housing Authority, City of Boston, New Bedford Housing Authority, and City of
New Bedford (in Massachusetts); the Nashua Housing Authority and the City of Nashua (in New
Hampshire); and our offices in Albuquerque, NM, and Houston, TX. Our review covered the
2009 American Recovery and Reinvestment Act grants and the 2011 and 2012 Capital Fund
grants for each of the housing agencies.

To accomplish our objectives, we

•   Reviewed applicable public laws and executive orders that direct the requirements of
    environmental compliance;
•   Reviewed the Federal regulations related to the environmental review process and HUD’s
    handbooks and guidance on environmental compliance;
•   Reviewed various HUD job descriptions related to environmental oversight;
•   Conducted interviews with staff from HUD’s Boston Office, selected housing agencies, and
    their respective responsible entities;
•   Analyzed HUD’s Boston Office’s, housing agencies’, and the responsible entities’
    environmental review processes for compliance with environmental requirements;
•   Analyzed environmental review records for the selected housing agencies to ensure that
    environmental requirements were met;
•   Compared the housing agencies’ original, revised, and final annual statements, as applicable,
    to determine the actual projects completed under the grants and any changes to the projects;
•   Reviewed HUD’s Recovery Act monitoring reports for the three selected housing agencies
    and noted any noncompliance issues related to environmental reviews;
•   Reviewed HUD’s Line of Credit Control System (LOCCS) grant budget, vouchers, and
    obligation and expenditures detail data. We did not evaluate the reliability of the LOCCS
    data as we used the data for informational purposes only.
•   Compared the Boston Office environmental tracking logs to the minimum internal control
    requirements set forth in HUD’s Field Office Environmental Review Guidance to ensure
    compliance; and
•   Compared the housing agencies’ contracts to LOCCS details and the environmental records
    to ensure that funds were not obligated or expended before completion of the review.

We selected the Boston Office and 3 out of 219 housing agencies within its jurisdiction based on
our risk assessment using information that we obtained related to funding levels, historic value,
industry uses, and the environmental process used.

We did not use or rely on computer-processed data to support our conclusions.




                                               15
We conducted the audit in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain sufficient, appropriate
evidence to provide a reasonable basis for our findings and conclusions based on our audit
objective(s). We believe that the evidence obtained provides a reasonable basis for our finding
and conclusions based on our audit objectives.




                                               16
                              INTERNAL CONTROLS

Internal control is a process adopted by those charged with governance and management,
designed to provide reasonable assurance about the achievement of the organization’s mission,
goals, and objectives with regard to

   •   Effectiveness and efficiency of operations,
   •   Reliability of financial reporting, and
   •   Compliance with applicable laws and regulations.

Internal controls comprise the plans, policies, methods, and procedures used to meet the
organization’s mission, goals, and objectives. Internal controls include the processes and
procedures for planning, organizing, directing, and controlling program operations as well as the
systems for measuring, reporting, and monitoring program performance.


 Relevant Internal Controls

               We determined that the following internal controls were relevant to our audit
               objectives:

               Controls to ensure that the Boston Office and the housing agencies and
               responsible entities within its jurisdiction properly implemented mandated
               environmental review requirements including

                  •   Controls to ensure that HUD did not release funds and the housing
                      agencies did not obligate or expend funds before completion of the
                      environmental reviews by the responsible entity,
                  •   Controls to ensure that the Boston Office complied with HUD’s Field
                      Office Environmental Review Guidance for maintaining tracking logs and
                      files,
                  •   Controls to ensure that the housing agencies and responsible entities were
                      monitored for environmental compliance, and
                  •   Controls to ensure that the housing agencies and responsible entities
                      received adequate training on environmental compliance for Capital Fund
                      grants.

               We assessed the relevant controls identified above.




                                                17
            A deficiency in internal control exists when the design or operation of a control does
            not allow management or employees, in the normal course of performing their
            assigned functions, the reasonable opportunity to prevent, detect, or correct (1)
            impairments to effectiveness or efficiency of operations, (2) misstatements in
            financial or performance information, or (3) violations of laws and regulations on a
            timely basis.

Significant Deficiency

            Based on our review, we believe that the following item is a significant deficiency:

            •      The Boston Office did not provide adequate oversight to ensure that housing
                   agencies and responsible entities within its jurisdiction complied with
                   environmental requirements (finding).




                                              18
                                   APPENDIXES

Appendix A

                 SCHEDULE OF QUESTIONED COSTS

                 Recommendation
                                        Ineligible 1/      Unsupported 2/
                     number

                        1A                                     $33,329,733
                        1B                                      21,478,604
                        1C                                      17,058,105
                        1D                                       1,169,494
                        1E                                         874,261
                        1F                                         728,596
                        1G                  $4,860,197
                        1H                                       3,154,021
                        1I                        22,786
                        1J                                       2,966,280

                        Totals              $4,882,983         $80,759,094




1/   Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity
     that the auditor believes are not allowable by law; contract; or Federal, State, or local
     policies or regulations.

2/   Unsupported costs are those costs charged to a HUD-financed or HUD-insured program
     or activity when we cannot determine eligibility at the time of the audit. Unsupported
     costs require a decision by HUD program officials. This decision, in addition to
     obtaining supporting documentation, might involve a legal interpretation or clarification
     of departmental policies and procedures.




                                             19
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Ref to OIG Evaluation                               Auditee Comments


                                                       U. S. Department of Housing and Urban Development

                                                       Office of Public Housing
                                                       Boston Hub
                                                       Thomas P. O’Neill, Jr. Federal Building
                                                       10 Causeway Street
               New England                             Boston, Massachusetts 02222-1092


             MEMORANDUM FOR: Gerald R. Kirkland, Regional Inspector General for Audit, 6AGA


             FROM: Marilyn B. O’Sullivan, Director, Office of Public Housing, Boston, 1APH


             SUBJECT:            Response to Draft Audit Report

                                 The Boston Office of Public Housing Did Not Provide Adequate Oversight of
                                 Environmental Reviews of Three Housing Agencies, Including Reviews
                                 Involving Recovery Act Funds


                       Thank you for proving this office the opportunity to respond to the draft report that was
             transmitted on November 27, 2013. As we discussed on December 5, 2013 please accept this
             memorandum as our response.

Comment 1               Generally, we are in disagreement and will be filing non concurrence memoranda for
             recommendations 1A, 1B, 1C, 1D, 1E, 1F, 1H and 1J, if these draft recommendations are
             finalized. Each of the preceding draft recommendations suggest that the Boston Office of Public
             Housing should require the three local Housing Authorities and the local Responsible Entities “to
             provide support that they complied with 24 CFR Part 58 requirements” for various Capital Fund
             grants (CFG) and Recovery Act (ARRA) grants provided to the three Public Housing Authorities
             (PHAs) from 2009 to 2012. The Office of Inspector General found that the Boston Office (of
Comment 2    Public Housing) “did not provide adequate oversight to three public housing agencies to ensure
             that the responsible entities (emphasis added) properly completed and documents
             environmental reviews.”

             Please consider the following:

Comment 3         •    The Office of Public Housing in Boston is not the delegated HUD office that ensures that
                       Responsible Entities (REs) perform appropriately under the regulations at 24 CFR 58.
                       Implementation and interpretation of the provisions in 24 CFR 50 and 58 is the
                       responsibility of CPD and the Office of Environment and Energy. (See 24 CFR 50.10(b),
                       which gives CPD and OEE (formerly Office of Community Viability and now the Office
                       of Energy and Environment) overall Departmental responsibility for environmental
                       policies and procedures for compliance with NEPA and related laws.


             Phone (617) 994-8400         www.hud.gov                espanol.hud.gov            Fax (617) 565-7305

                                                        20
                                                                                                                      2


              •    It is our position that HUD’s Office of Community Planning and Development (CPD) is
Comment 4          responsible for monitoring REs performing environmental reviews and offers
                   attachments A and B as supporting evidence (Pending CPD notice #38 and email
                   response from OEE stating that the pending guidance identified here as exhibit A updates
                   the previous posted CPD notice 2003-1) that confirms CPD’s monitoring
                   authority. Evidence for IG’s contrary position is requested. CPD holds the authority for
                   assuring regulatory compliance with 24 CFR Part 58. PIH cannot interpret, waive,
                   adjudicate, enforce or in any way address these regulatory requirements.

Comment 5     •    The first stated objective of the IG is to ensure that “the responsible entities performed
                   the required reviews”. Should the IG find a failure under this first objective, the
                   responsible party is the entity acting on behalf of HUD to fulfill its delegated
                   responsibilities and not the Office of Public Housing nor PHAs.

Comment 6     •    The Boston Office of Public Housing provided full oversight of the three identified PHAs
                   for the programs charged to the Assistant Secretary for PIH by the Secretary and has
                   documentation supporting that the an Environmental Review was completed prior to the
                   expenditure or release of funds to the PHAs.


                       This office will also be in non-concurrence with Recommendation 1G. Recommendation
Comment 7   1G recommends that the Boston Office of Public Housing direct the New Bedford Housing
            Authority to repay $4,860,197 in Recovery Act grant funds to HUD for its transmission to the
            U.S. Treasury. Repayment must be from non-Federal funds. It is unclear from the narrative in
            the report why the entire Recovery Act grant was found to be potentially ineligible and the
            recommendation for full repayment. There is discussion on page 6 of the draft regarding
            disagreements whether certain elements of the ARRA grant were compliant with procedures of
            Part 58 prior to the implementation of the ARRA grant. Evidence cited includes a monitoring
            report from the Boston Office of Public Housing suggesting that some work items may not have
            been compliant. This office does not disagree that our monitoring report in January 2010 cited
            deficiencies in work items associated with the Recovery Act. The items cited by my office as potentially
            non-compliant include administrative and relocation costs in the total amount of
            $87,000. This office concluded that the work items were covered subsequently since they were
            included in the Environmental Review Record post ARRA grant and required no further action
            by the New Bedford HA. If a determination is made that the NBHA was non-compliant with
            Environmental Review requirements prior to implementation of the ARRA then the non-
            compliant portions should be held as non-compliant and not the entire grant. Further, the work
            items are exempt or categorically excluded and received clearance post ARRA. Lastly, there
            was no harm to the United States or the local community.

                      Finally, recommendation 1K recommends a display of no harm in order to clear the
Comment 8   recommendation. As is stated previously in the memorandum, it is the position of this Office of
            Public Housing that the Environmental Review Record is complete to our satisfaction in all
            instances. Since the record is clear we can find no harm caused by the implementation of the
            capital projects associated with the grants cited in this report. Further we believe that the burden



            Phone (617) 994-8400          www.hud.gov                espanol.hud.gov             Fax (617) 565-7305




                                                        21
                                                                                                    3


of proof that would be required to complete the actions recommended cannot be adjudicated by
the Office of Public Housing since we are not delegated to act in this capacity.


Recommendations from the draft report:

1A. The Boston Housing Authority and the City of Boston to provide support that they complied
with 24 CFR Part 58 requirements for the Authority’s Recovery Act grant or repay $33,329,733
to HUD for its transmission to the U.S. Treasury. Repayment must be from non-Federal funds.

1B. The Boston Housing Authority and the City of Boston to provide support that they complied
with 24 CFR Part 58 requirements for the Authority’s 2011 Capital Fund grant or repay
$21,478,604 to HUD. Repayment must be from non-Federal funds.


1C. The Boston Housing Authority and the City of Boston to provide support that they complied
with 24 CFR Part 58 requirements for the Authority’s 2012 Capital Fund grant or reimburse
$17,058,105 to the Authority’s 2012 Capital Fund grant from non-Federal funds.

1D. The Nashua Housing Authority and the City of Nashua to provide support that they complied with
24 CFR Part 58 requirements for the Authority’s Recovery Act grant or repay $1,169,494 to HUD for its
transmission to the U.S. Treasury. Repayment must be from non-Federal funds.

1E. The Nashua Housing Authority and the City of Nashua to provide support that they
complied with 24 CFR Part 58 requirements for the Authority’s 2011 Capital Fund grant or repay
$874,261 to HUD. Repayment must be from non-Federal funds.

1F. The Nashua Housing Authority and the City of Nashua to provide support that they complied
with 24 CFR Part 58 requirements for the Authority’s 2012 Capital Fund grant or reimburse
$728,596 to the Authority’s 2012 Capital Fund grant from non-Federal funds.

1G. The New Bedford Housing Authority to repay $4,860,197 in Recovery Act grant funds to
HUD for its transmission to the U.S. Treasury. Repayment must be from non-Federal funds.

1H. The New Bedford Housing Authority and the City of New Bedford to provide support that
they complied with 24 CFR Part 58 requirements for the Authority’s 2011 Capital Fund grant or
repay $3,154,021 to HUD. Repayment must be from non-Federal funds.

1I. The New Bedford Housing Authority to repay $22,786 from non-Federal funds to its 2012
Capital Fund grant for salaries and benefits that were released before the responsible entity
documented that activities met exemption requirements.

1J. The New Bedford Housing Authority and the City of New Bedford to provide support that
they complied with 24 CFR Part 58 requirements for the Authority’s 2012 Capital Fund grant or
reimburse $2,966,280 to the Authority’s 2012 Capital Fund grant from non-Federal funds.


Phone (617) 994-8400       www.hud.gov               espanol.hud.gov           Fax (617) 565-7305




                                         22
                                                                                                    4

1K. The housing agencies to work with their respective responsible entities and local HUD
environmental officer to show that no harm occurred from completion of all of the projects or
mitigate any harm that occurred.




Phone (617) 994-8400       www.hud.gov               espanol.hud.gov           Fax (617) 565-7305




                                        23
                                  OIG Evaluation of Auditee Comments

Comment 1         The draft recommendations proposed requiring the housing agencies and the
                  responsible entities to provide support for their environmental reviews, or repay
                  questioned funds. We revised the recommendations to clarify that the housing
                  agencies are responsible for repayment of funds if they cannot provide
                  documentation supporting compliance with requirements. However, if the
                  housing agencies and responsible entities can provide proper documentation to
                  support compliance of the environmental decisions made, any supported amounts
                  will not need to be repaid.

Comment 2         As part of its oversight, the Boston Office was responsible for periodically
                  monitoring the public housing agencies’ environmental review records. If the
                  Boston Office had monitored the records, it should have found that the records
                  were incomplete and the environmental reviews were improperly performed by
                  the housing agencies, which should have led the Boston Office to review the
                  responsible entities in relation to their Capital Fund environmental reviews.

Comment 3         While the criteria quoted does outline overall responsibility for environmental
                  policy and procedures to CPD’s Office of Environment and Energy (OEE), 16 this
                  does not include implementation. As 24 CFR 50.10(a) states, it is the
                  responsibility of all Assistant Secretaries, the General Counsel, and the HUD
                  approving official to assure that the requirements of this part are implemented.
                  The Office of Public Housing has an Assistant Secretary who is responsible for
                  ensuring implementation. Further, it has an environmental clearance officer
                  whose role is to provide environmental compliance reviews.

Comment 4         The Boston Office’s response included attachments A and B. 17 Attachment A is a
                  draft CPD Notice that has not been approved. Further, it is not applicable to our
                  audit period. Attachment B is a series of emails between the HUD headquarters
                  Office of Public Housing environmental clearance officer, Boston Office of
                  Public Housing director, and an environmental specialist from OEE. The emails,
                  written on December 5 and December 6, 2013, after we issued our draft report to
                  the Boston Office, generally discuss the draft notice and a CPD Notice from 2003.

                  In the emails, the OEE environmental specialist states that the draft Notice
                  updates a 2003 notice on risk assessments. She refers to a notice on the CPD
                  grant program risk analysis. The reference appears to be to Notice CPD-03-01,
                  Implementing Risk Analysis for Monitoring Responsible Entities for Compliance
                  with 24 CFR Part 58 for FY 2003. The Notice expired on February 10, 2004. It


16
     The Office of Environment and Energy is the office within CPD that has been delegated overall responsibility
     for environmental policies and procedures for compliance with NEPA and the related laws and authorities.
17
     We did not include the attachments in the report because the emails contain discussions about the draft notice.
     Since the notice is in draft form, the documents cannot be publicized.


                                                         24
was renewed on June 17, 2005, and expired on June 17, 2006. There is no
evidence that it was subsequently renewed.

While none of the prior CPD notices or regulations confirm that OEE was
responsible for ensuring compliance for public housing programs this is what the
Boston Office asserts in its response. The purpose stated in Notice CPD-03-01
was to provide a consistent methodology for risk analysis to establish priorities
for monitoring responsible entities. The notices gave the OEE field
environmental officers directions for performing and ranking the risk of the
responsible entities, but did not assign responsibility for monitoring public
housing program compliance. In fact, Notice CPD-03-01 states that while field
environmental officers are assigned primary responsibility for performing
environmental risk analyses, other HUD guidance requires program staff to assess
environmental concerns as part of their overall risk analysis. Program staff may
inquire into environmental procedures when conducting on-site monitoring and
can be a source of information to field environmental officers on the overall and
environmental compliance profile. It further states that the results of the risk
analysis should become a key part of the overall monitoring strategy that is
communicated to the Field Office Director, the Headquarters Office of
Community Viability, and other program office staff with whom collaboration
about the overall environmental monitoring strategy is necessary. We believe that
this demonstrates that the CPD risk analysis was intended to be a tool to assist not
only CPD, but the other program areas in developing an overall monitoring
strategy. It does not state that CPD or OEE were responsible for monitoring other
program areas.

The emails show that the environmental clearance officer and the Boston Office
Public Housing director were unclear as to who was responsible for monitoring.
In one email, the headquarters environmental clearance officer states that she is
still confused and recognizes that although regional and field environmental staff
are assigned primary responsibility for performing environmental risk analyses,
other HUD guidance requires program staff to assess environmental concerns as
part of their overall risk assessment. The Boston Office Public Housing director
refers to Notice CPD-03-01 and its extension through early 2006. She then states
that she found CPD notices that speak of monitoring CPD programs but not for
public housing programs. Ultimately, the headquarters environmental officer
concludes that since all guidance is based on regulatory authority; there cannot be
a notice issued without a supporting regulation. So during the time CPD Notice-
03-01 is expired, the reliance on monitoring rests with the regulations, and OEE
owns the regulations. However, she failed to recognize that the regulations do not
assign monitoring responsibility to CPD or OEE for public housing programs.

We stand by our conclusions.




                                 25
Comment 5   Our objectives were to determine whether the Boston Office’s oversight of public
            housing environmental reviews within its jurisdiction ensured that (1) the
            responsible entities performed the required reviews and (2) HUD did not release
            funds until all required documents were submitted. According to the General
            Deputy Assistant Secretary for Public and Indian Housing, public housing does
            have some direct oversight and the regional offices performed training and
            monitoring.

Comment 6   Based on the documentation provided to OIG from the Boston office, housing
            agencies, and responsible entities, the Boston Office of Public Housing did not
            provide oversight of the housing agencies and lacked documentation supporting
            the environmental reviews were properly completed. As shown in the report, on
            several occasions HUD released funds prior to completion of environmental
            reviews, which the regulations clearly state is not allowed including for activities
            that are considered exempt.

Comment 7   The recommendation requires repayment of the New Beford Housing Authority
            Recovery Act grant as there was no environmental review completed. The
            housing agency was influenced to state that its 2008 environmental review was a
            5-year review and would cover the 2009 Recovery Act grant. The housing
            agency stated there were no additional items in its Recovery Act grant, but the
            HUD monitoring report showed otherwise. Any review of these additional items
            that occurred subsequently would not meet the compliance requirements,
            regardless of the categorization level.

Comment 8   The environmental review records for the three housing agencies reviewed are not
            complete and did not address or support the compliance factors listed in 24 CFR
            58.5. Based on the Boston Office’s response, the OIG added an additional
            recommendation, 1L, related directly to actions HUD may take when non-
            compliance issues are found.




                                             26
Appendix C
                                         CRITERIA

Criterion 1
The purpose of NEPA is to declare a national policy that will encourage productive and
enjoyable harmony between man and his environment. To carry out the policy set forth in this
Act, it is the continuing responsibility of the Federal Government to use all practicable means,
consistent with other essential considerations of national policy, to improve and coordinate
Federal plans, functions, programs, and resources to the end that the Nation may attain the widest
range of beneficial uses of the environment without degradation, risk to health or safety, or other
undesirable and unintended consequences.

Criterion 2
Executive Order 11514, section 2(a), states that the heads of Federal agencies must “monitor,
evaluate, and control on a continuing basis their agencies’ activities so as to protect and enhance
the quality of the environment. Agencies shall develop programs and measures to protect and
enhance environmental quality and shall assess progress in meeting the specific objectives of
such activities.”

Criterion 3
Regulations at 24 CFR 58.2(a)(7)(ii)(B) state that “responsible entity” means, for public housing
agencies, the unit of general local government within which the project is located that exercises
land use responsibility.

Criterion 4
Regulations at 24 CFR 58.4(a) state that “responsible entities shall assume the responsibility for
environmental review, decision-making, and action that would otherwise apply to HUD under
NEPA and other provision of law that further the purposes of NEPA, as specified in §58.5.”

Criterion 5
Regulations at 24 CFR 58.5 state that “the responsible entity must certify that it has complied
with the requirements that would apply to HUD under these laws and authorities and must
consider the criteria, standards, policies, and regulations of these laws and authorities.”

The statutory requirements (checklist) for categorically excluded projects subject to 24 CFR 58.5
include

   •   Air quality,
   •   Airport hazards (clear zones and accident potential zones),
   •   Coastal zone management,
   •   Contamination and toxic substances,
   •   Endangered species,
   •   Environmental justice,
   •   Explosive and flammable operations,

                                                27
   •   Farmlands protection,
   •   Floodplain management,
   •   Historic preservation,
   •   Noise abatement and control,
   •   Water quality (sole-source aquifers),
   •   Wetland protection, and
   •   Wild and scenic rivers.
Criterion 6
Regulations at 24 CFR 58.6 state that the responsible entity remains responsible for addressing
requirements in its environmental review record and meeting these requirements, as applicable,
regardless of whether the activity is exempt or categorically excluded.

The statutory requirements (checklist) for all projects subject to 24 CFR 58.6 include

   •   Airport runway protection zone and clear zone notification,
   •   The Coastal Barriers Resources Act and Coastal Barrier Improvement Act, and
   •   The Flood Disaster Protection Act (flood insurance).
Criterion 7
Regulations at 24 CFR 58.11(a) state that a responsible entity that believes that it does not have
the legal capacity to carry out the environmental responsibilities required by this part must
contact the appropriate local HUD office for further instructions.

Criterion 8
Regulations at 24 CFR 58.22(b) state that if a project or activity is exempt under section 58.34 or
is categorically excluded under section 58.35(b), no Request for Release of Funds and
Certification is required and the recipient may undertake the activity immediately after the
responsible entity has documented its determination as required in sections 58.34(b) and 58.35(d)
but the recipient must comply with applicable requirements under section 58.6.

Criterion 9
Regulations at 24 CFR 58.30(a) state that “the environmental review process consists of all the
actions that a responsible entity must take to determine compliance with this part.”

Criterion 10
Regulations at 24 CFR 58.38 state that the responsible entity must maintain a written record of
the environmental review undertaken under this part for each project. The document will be
designated the “environmental review record” and must be available for public review. The
responsible entity must use the current HUD-recommended formats or develop equivalent
formats.




                                                28
Criterion 11
Regulations at 24 CFR 58.38(a) state that “the environmental review record shall contain all the
environmental review documents, public notices and written determinations or environmental
findings required by this part as evidence of review, decision-making and actions pertaining to a
particular project of a recipient. The document shall:
    1. Describe the project and the activities that the recipient has determined to be part of the
        project;
    2. Evaluate the effects of the project or the activities on the human environment;
    3. Document compliance with applicable statutes and authorities, in particular those cited in
        §58.5 and 58.6; and
    4. Record the written determinations and other review findings required by this part.”
Criterion 12
Regulations at 24 CFR 58.38(b) state that the environmental review record must contain
verifiable source documents and relevant base data used or cited in environmental assessments,
environmental impact statements, or other project review documents. These documents may be
incorporated by reference into the environmental review record, provided each source document
is identified and available for inspection by interested parties. Proprietary material and special
studies prepared for the recipient that are not otherwise generally available for public review
must not be incorporated by reference but must be included in the environmental review record.

Criterion 13
Regulations at 24 CFR 58.43(c) state that “the responsible entity must consider the comments
and make modifications, if appropriate, in response to the comments, before it completes its
environmental certification and before the recipient submits its Request for Release of Funds &
Certification (RROF).”

Criterion 14
Regulations at 24 CFR 58.47(a)(1) state that “a responsible entity must re-evaluate its
environmental findings to determine if the original findings are still valid, when the recipient
proposes substantial changes in the nature, magnitude or extent of the project, including adding
new activities not anticipated in the original scope of the project.”

Criterion 15
Regulations at 24 CFR 58.47(b)(3) state that when the recipient is not the responsible entity, the
recipient must inform the responsible entity promptly of any proposed substantial changes, new
circumstances or environmental conditions, or proposals to select a different alternative and must
then permit the responsible entity to reevaluate the findings before proceeding.

Criterion 16
Regulations at 24 CFR 58.77(d) state that at least once every 3 years, HUD intends to conduct
in-depth monitoring and exercise quality control (through training and consultation) over the
environmental activities performed by responsible entities under this part. Limited monitoring of
these environmental activities will be conducted during each program monitoring site visit. If,
through limited or in-depth monitoring of these environmental activities or by other means, HUD
becomes aware of environmental deficiencies, HUD may take one or more actions, including
requiring attendance by staff of the responsible entity at HUD-sponsored or -approved training.

                                                29
Criterion 17
Regulations at 24 CFR 990.116 state that “the environmental review procedures of the National
Environmental Policy Act of 1969 (42 U.S.C. [United States Code] 4332(2)(C)) and the
implementing regulations at 24 CFR parts 50 and 58 are applicable to the Operating Fund
Program.”

Criterion 18
Regulations at 36 CFR 800.4(d)(1) state, “No Historic Properties Affected – If the agency
official finds that either there are no historic properties present or there are historic properties
present but the undertaking will have no effect upon them as defined in §800.16(i), the agency
official shall provide documentation of this finding, as set forth in §800.11(d), to the SHPO/
THPO. 18 The agency official shall notify all consulting parties including Indian tribes and
Native Hawaiian organizations, and make the documentation available for public inspection prior
to approving the undertaking. If the SHPO/THPO, or the Council if it has entered the section
106 process, does not object within 30 days of receipt of an adequately documented finding, the
agency official’s responsibilities under section 106 are fulfilled.”

Criterion 19
Office of Public and Indian Housing-Office of Field Operations, Field Office Environmental
Review guidance states that “at a minimum, the Office of Public Housing must maintain the
following:

     •   A list of responsible entities who HUD has determined will or will not perform the
         environmental review on behalf of the Department. This list will be an important
         document for determining which public housing agencies will need to submit the
         clearance documents;
     •   A list of Request for Release of Funds certifications that have been received and
         clearance provided;
     •   A list of environmental reviews that have been conducted by the Office of Public
         Housing for each program requiring environmental clearance; and
     •   Separate environmental clearance files for each public housing agency.”




18
     State historic preservation officer/tribal historic preservation officer


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