(1) The department shall conduct an environmental review of the planning document for each project in the fundable range of the priority list to determine whether any significant impacts are anticipated and whether any changes can be made in the project to eliminate significant adverse impacts. As part of the environmental review, the department may require a municipality to submit additional information or meet additional public participation and coordination requirements to justify the environmental determination.

    (2) Based on the environmental review completed under subsection (1), the department may determine that an environmental assessment is necessary and the department may describe any of the following in its determination:

    (a) The purpose and need for the project.

    (b) The project costs.

    (c) The alternatives considered and the reasons for their acceptance or rejection.

    (d) The existing environment.

    (e) Any potential adverse impacts and mitigative measures.

    (f) How mitigative measures will be incorporated into the project, as well as any proposed conditions of financial assistance and the means for monitoring compliance with the conditions.

    (3) Based on an environmental assessment completed under subsection (2), the department may issue a finding of no significant impact. The finding of no significant impact must document that the potential environmental impacts will not be significant or that the environmental impacts may be mitigated without extraordinary measures.

    (4) Based on an environmental assessment completed under subsection (2), the department may require a municipality to complete an environmental impact statement if the department determines any of the following:

    (a) The project will have significant adverse impacts on any of the following:

    (i) Wetlands.

    (ii) Flood plains.

    (iii) Threatened or endangered species or habitats.

    (iv) Cultural resources, including any of the following:

    (A) Park lands.

    (B) Preserves.

    (C) Other public lands.

    (D) Areas of recognized scenic, recreational, agricultural, archeological, or historical value.

    (b) The project will cause significant displacement of population.

    (c) The project will directly or indirectly, such as through induced development, have a significant adverse effect upon any of the following:

    (i) Local ambient air quality.

    (ii) Public health.

    (iii) Local noise levels.

    (iv) Surface water and groundwater quantity or quality.

    (v) Shellfish.

    (vi) Fish.

    (vii) Wildlife.

    (viii) Wildlife natural habitats.

    (d) The project will generate significant public controversy.

    (5) Based on the environmental impact statement, the department shall issue a record of decision summarizing the findings of the environmental impact statement that identifies the conditions under which the project can proceed and maintain compliance with the national environmental policy act of 1969, Public Law 91-190, 42 USC 4321, 4331 to 4335, and 4341 to 4347.

    (6) If 5 or more years have elapsed since a determination of compliance with the national environmental policy act of 1969, Public Law 91-190, 42 USC 4321, 4331 to 4335, and 4341 to 4347, or if significant changes in the project have occurred, the department shall reevaluate the project for compliance with the national environmental policy act of 1969, Public Law 91-190, 42 USC 4321, 4331 to 4335, and 4341 to 4347, and the department may do any of the following:

    (a) Reaffirm the original finding of no significant impact or the record of decision through the issuance of a public notice or statement of finding.

    (b) Issue an amendment to a finding of no significant impact or revoke a finding of no significant impact and issue a public notice that the preparation of an environmental impact statement is required.

    (c) Issue a supplement to a record of decision or revoke a record of decision and issue a public notice that financial assistance will not be provided.

    (7) Action regarding approval of a planning document or provision of financial assistance must not be taken during a 30-day public comment period after the issuance of a finding of no significant impact or record of decision.