Five Environmental Review Mistakes That Put CDBG-DR Projects at Risk

Environmental review plays an important role in HUD-assisted projects, particularly those supported through programs such as Community Development Block Grant-Disaster Recovery (CDBG-DR). CDBG-DR environmental reviews are generally conducted under 24 CFR Part 58, under which responsible entities (REs) assume HUD’s environmental review responsibilities. The process addresses the National Environmental Policy Act (NEPA) and related federal environmental laws and authorities based on the project's activities, location, and potential impacts.

Environmental requirements can affect project schedules, procurement activities, funding eligibility, and implementation decisions. When environmental review is addressed early and managed throughout the project lifecycle, agencies are better positioned to keep projects moving forward.

Many compliance issues occur because environmental review is viewed as a standalone requirement rather than an integrated part of program delivery. Environmental review is intended to inform project planning and decision-making, not simply satisfy a documentation requirement. Understanding common pitfalls can help agencies reduce delays, avoid corrective actions, and minimize the risk of project ineligibility.

1. Starting Environmental Review Too Late

One of the most common challenges is waiting until project planning is largely complete to begin addressing environmental requirements.

Environmental review can influence decisions related to site selection, project design, procurement, construction, and funding. When environmental considerations are not addressed early, agencies may discover issues that require additional analysis, consultation, mitigation measures, or project modifications. These changes can affect schedules and create additional administrative work.

Environmental review should be integrated into project development early enough to inform site selection, project scope, design, budgeting, and procurement strategy. Waiting until major project decisions have already been made can result in avoidable redesign, additional consultation requirements, and schedule delays. Early coordination can help agencies identify potential concerns, establish realistic timelines, and avoid unnecessary disruptions during implementation.

2. Taking Choice-Limiting Actions Before Environmental Clearance

Choice-limiting actions are among the most significant environmental compliance risks for CDBG-DR and other HUD-assisted projects.

A choice-limiting action is an activity that restricts the ability to consider reasonable alternatives. Once a project has a federal nexus, recipients and their partners cannot commit HUD or non-HUD funds to choice-limiting activities or take physical actions that limit reasonable alternatives before the applicable environmental review process is complete.

Common examples include:

• Acquiring or entering into a lease for project property
• Demolition, site preparation, grading, or clearing activities 
• Construction, reconstruction, rehabilitation, or repair work 
• Executing contracts or issuing notices to proceed
• Committing or expending HUD or non-HUD funds on choice-limiting project activities 
• Advancing project plans to a point where reasonable alternatives can no longer be meaningfully evaluated

Violations can place funding eligibility at risk and create significant challenges for project implementation. Clear internal review procedures and staff training can help agencies identify potential issues before actions are taken. Because executing a contract can itself create a prohibited commitment, agencies could establish a pre-execution review to determine whether the agreement would constitute or authorize a choice-limiting action.

While a project may start out as a private project without federal involvement, once the recipient or subrecipient decides to seek CDBG-DR funding or otherwise establishes a federal nexus, any further choice-limiting actions should be paused until the required environmental review process is completed and environmental clearance is obtained. 

Continuing construction, acquisition, demolition, contracting, or other activities that restrict the consideration of reasonable alternatives after a funding application is submitted can put federal assistance at risk. Agencies should establish procedures for applicants and subrecipients to promptly notify program staff as soon as federal funding is being considered so that project activities can be evaluated and, if necessary, paused pending environmental clearance.

3. Failing to Reevaluate Environmental Reviews When Projects Change

Projects frequently evolve during implementation. Funding sources may change, project scopes may expand, locations may shift, or design elements may be modified. Under 24 CFR 58.47, REs must reevaluate their environmental findings when there are substantial changes in the nature, magnitude, or extent of the project; new circumstances or environmental conditions that may affect the project or its impacts; or selection of an alternative not considered in the original finding.

A reevaluation does not always require an entirely new environmental review. The RE must determine whether the original findings remain valid and document that determination within the environmental review record (ERR). If the original findings are no longer valid, additional review, consultation, public notice, or clearance may be required before revised activities proceed.

Integrating environmental review checkpoints into change orders, scope amendments, site substitutions, and supplemental funding decisions can help agencies identify reevaluation needs before changes are approved or implemented.

4. Misusing Environmental Review Adoption

Environmental review adoption can be a valuable tool for disaster recovery and infrastructure projects. In qualifying circumstances, CDBG-DR grantees may be able to adopt environmental review documentation prepared by another federal agency, including FEMA, to reduce duplication and streamline project delivery.

Successful adoption depends on careful evaluation and documentation. Agencies need to verify that the prior review covers the same project scope, satisfies applicable adoption requirements, and is supported by documentation maintained in the ERR. When scopes do not fully align, the grantee will need to determine whether the prior review can be supplemented or whether additional environmental review is required.

Common issues arise when:

• The project scope differs from the original review
• Supporting documentation is incomplete
• The basis for adoption is not clearly documented
• Project changes occur after adoption without additional review

Adoption used without scope verification and clear documentation can create the same compliance exposure it was intended to avoid.

5. Maintaining Weak Environmental Review Records

Strong documentation is the foundation of environmental compliance.

The ERR provides the documentation necessary to demonstrate compliance with applicable requirements and support monitoring, audits, and program oversight activities. Missing analyses, incomplete records, unclear determinations, and inconsistent documentation frequently lead to findings and corrective actions.

A strong ERR should clearly document:

• Project activities and scope
• Environmental findings and determinations
• The factual basis supporting those determinations
• Required consultations, approvals, and responses
• Public notices and comment periods, when applicable
• Supporting studies, maps, analyses, photographs, and correspondence
• Mitigation measures and evidence of implementation
• Reevaluations, project modifications, and related decisions

A complete ERR should allow an independent reviewer to understand the project, reconstruct the decision-making process, and verify compliance without relying on undocumented assumptions. 

Building a Stronger Environmental Compliance Approach

Organizations that successfully manage environmental review requirements often share several common practices. They begin environmental review early, coordinate across departments, establish clear procedures, monitor project changes, and maintain thorough documentation throughout implementation.

Strong environmental compliance also depends on integrating environmental review into project intake, site selection, procurement, contracting, change management, construction authorization, payment, and closeout. Clear decision points and defined responsibilities can help prevent projects from advancing before required reviews, consultations, notices, and approvals are complete.

As governments continue to invest in recovery, resilience, infrastructure, housing, and community development initiatives, environmental review will remain a critical component of successful program management. By understanding and addressing these common pitfalls, agencies can strengthen internal controls, reduce risk, and support more efficient project delivery.

How BDO Government Services Can Help

BDO Government Services supports state, local, territorial, tribal, and housing agencies in navigating environmental compliance requirements across HUD-assisted and other federally funded programs. Our team works with agencies to develop environmental review procedures, support required analyses and consultations, evaluate compliance risks, strengthen ERR documentation, and integrate environmental requirements into program operations. From disaster recovery and housing programs to infrastructure and community development initiatives, we help organizations align environmental requirements with program delivery needs.