Surface Transportation Project Delivery Pilot Program; Caltrans Audit Report, 76091-76096 [E8-29628]

Agencies

• Federal Highway Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 73, Number 241 (Monday, December 15, 2008)]
[Notices]
[Pages 76091-76096]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-29628]


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DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

[FHWA Docket No. FHWA-2008-0158]


Surface Transportation Project Delivery Pilot Program; Caltrans 
Audit Report

AGENCY: Federal Highway Administration (FHWA), DOT.

ACTION: Notice; request for comment.

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SUMMARY: Section 6005 of the Safe, Accountable, Flexible, Efficient 
Transportation Equity Act: A Legacy for Users (SAFETEA-LU) established 
the Surface Transportation Project Delivery Pilot Program, codified at 
23 U.S.C. 327. Section 327(g) of Title 23, United States Code mandates 
semiannual audits during each of the first 2 years of State 
participation to ensure compliance by each State participating in the 
Pilot Program. This notice announces and solicits comments on the 
second audit report for the California Department of Transportation 
(Caltrans).

DATES: Comments must be received on or before January 14, 2009.

ADDRESSES: Mail or hand deliver comments to Docket Management Facility: 
U.S. Department of Transportation, 1200 New Jersey Avenue, SE., Room 
W12-140, Washington, DC 20590. You may also submit comments 
electronically at https://www.regulations.gov, or fax comments to (202) 
493-2251.
    All comments should include the docket number that appears in the 
heading of this document. All comments received will be available for 
examination and copying at the above address from 9 a.m. to 5 p.m., 
e.t., Monday through Friday, except Federal holidays. Those desiring 
notification of receipt of comments must include a self-addressed, 
stamped postcard or you may print the acknowledgment page that appears 
after submitting comments electronically. Anyone is able to search the 
electronic form of all comments in any one of our dockets by the name 
of the individual submitting the comment (or signing the comment, if 
submitted on behalf of an association, business, or labor union). You 
may review the DOT's complete Privacy Act Statement in the Federal 
Register published on April 11, 2000 (Volume 65, Number 70, Pages 
19477-78), or you may visit https://DocketsInfo.dot.gov.

FOR FURTHER INFORMATION CONTACT: Ms. Ruth Rentch, Office of Project 
Development and Environmental Review, (202) 366-2034, 
Ruth.Rentch@dot.gov, or Mr. Michael Harkins, Office of the Chief 
Counsel, (202) 366-4928, Michael.Harkins@dot.gov, Federal Highway 
Administration, Department of Transportation, 1200 New Jersey Avenue, 
SE., Washington, DC 20590. Office hours are from 7:45 a.m. to 4:15 
p.m., e.t., Monday through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION:

Electronic Access

    An electronic copy of this notice may be downloaded from the Office 
of the Federal Register's home page at https://www.archives.gov and the 
Government Printing Office's Web site at https://www.access.gpo.gov.

Background

    Section 6005 of the Safe, Accountable, Flexible, Efficient 
Transportation Equity Act: A Legacy for Users (SAFETEA-LU) (codified at 
23 U.S.C. 327) established a pilot program to allow up to five States 
to assume the Secretary of Transportation's responsibilities for 
environmental review, consultation, or other actions under any Federal 
environmental law pertaining to the review or approval of highway 
projects. In order to be selected for the pilot program, a State must 
submit an application to the Secretary.
    On June 29, 2007, Caltrans and FHWA entered into a Memorandum of 
Understanding (MOU) establishing the assignments to and assumptions of 
responsibility to Caltrans. Under the MOU, Caltrans assumed the 
majority of FHWA's responsibilities under the National Environmental 
Policy Act, as well as the FHWA's responsibilities under other Federal 
environmental laws for most highway projects in California.
    Section 327(g) of Title 23, United States Code, requires the 
Secretary to conduct semiannual audits during each of the first 2 years 
of State participation, and annual audits during each subsequent year 
of State participation to

[[Page 76092]]

ensure compliance by each State participating in the Pilot Program. The 
results of each audit must be presented in the form of an audit report 
and be made available for public comment. This notice announces the 
availability of the second audit report for Caltrans and solicits 
public comment on same.

    Authority: Section 6005 of Public Law 109-59; 23 U.S.C. 315 and 
327; 49 CFR 1.48.

    Issued on: December 1, 2008.
Thomas J. Madison, Jr.,
Federal Highway Administrator.

Draft Report

Surface Transportation Project Delivery Pilot Program

Federal Highway Administration Audit of California Department of 
Transportation

July 28-August 1, 2008

Background

    The Safe, Accountable, Flexible, Efficient Transportation Equity 
Act: A Legacy for Users (SAFETEA-LU, Pub L. 109-59) section 6005(a) 
established the Surface Transportation Project Delivery Pilot 
Program (Pilot Program), codified at title 23, United States Code 
(U.S.C.), section 327. The Pilot Program allows the Secretary to 
assign, and the State to assume, the Secretary of Transportation's 
(Secretary) responsibilities under the National Environmental Policy 
Act (NEPA) for one or more highway projects. Upon assigning NEPA 
responsibilities, the Secretary may further assign to the State all 
or part of the Secretary's responsibilities for environmental 
review, consultation, or other action required under any Federal 
environmental law pertaining to the review of a specific highway 
project. When a State assumes the Secretary's responsibilities under 
this program, the State becomes solely responsible and liable for 
carrying out the responsibilities it has assumed, in lieu of the 
Federal Highway Administration (FHWA).
    To ensure compliance by each State participating in the Pilot 
Program, 23 U.S.C. 327(g) mandates that FHWA, on behalf of the 
Secretary, conduct semiannual audits during each of the first two 
years of State participation; and annual audits during each 
subsequent year of State participation. The focus of the FHWA audits 
is to assess a pilot State's compliance with the required Memorandum 
of Understanding (MOU) \1\ and applicable Federal laws and policies, 
to collect information needed to evaluate the success of the Pilot 
Program, to evaluate pilot State progress toward achieving its 
performance measures, and to collect information needed for the 
Secretary's annual report to Congress on the administration of the 
Pilot Program. Additionally, 23 U.S.C. 327(g) requires FHWA to 
present the results of each audit in the form of an audit report. 
This audit report must be made available for public comment, and 
FHWA must respond to public comments received no later than 60 days 
after the date on which the period for public comment closes.
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    \1\ Caltrans MOU between FHWA and Caltrans available at: https://
environment.fhwa.dot.gov/strmlng/safe_cdot_pilot.asp.
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    The California Department of Transportation (Caltrans) published 
its Application for Assumption (Application) under the Pilot Program 
on March 14, 2007, and made it available for public comment for 30 
days. After considering public comments, Caltrans submitted its 
application to FHWA on May 21, 2007, and FHWA, after soliciting the 
views of other Federal agencies, reviewed and approved the 
application. Then on June 29, 2007, Caltrans and FHWA entered into a 
MOU that established the assignments to and assumptions of 
responsibility to Caltrans, which became effective July 1, 2007. 
Under the MOU, Caltrans assumed the majority of FHWA's 
responsibilities under NEPA, as well as FHWA's responsibilities 
under other Federal environmental laws for most highway projects in 
California. Caltrans' participation in the Pilot Program will be 
effective through August 2011 (23 U.S.C 327(i)(1)).

Scope of the Audit

    This is the second FHWA audit of Caltrans' participation in the 
Pilot Program. The onsite portion of this audit was conducted by the 
FHWA audit team in California from July 28 through August 1, 2008. 
As required in SAFETEA-LU, the second audit assessed Caltrans' 
compliance with the roles and responsibilities it assumed in the MOU 
and also provided recommendations to assist Caltrans in conducting a 
successful Pilot Program.
    The audit reviewed the following core areas: (1) Program 
management; (2) legal sufficiency; (3) performance measures; (4) 
documentation and file management; (5) training; and (6) quality 
assurance and quality control measurement. Prior to the onsite 
visits, FHWA conducted telephone interviews with staff in the 
Caltrans Headquarters (HQ) office and with staff in Federal resource 
agency regional offices (Environmental Protection Agency, U.S. Corps 
of Engineers, U.S. Fish and Wildlife Service, National Oceanic and 
Atmospheric Administration and U.S.D.A. Forest Service) and the 
California State Historic Preservation Office. The audit included 
onsite visits to three Caltrans District Offices: District 7 (Los 
Angeles), District 8 (San Bernardino), and District 11 (San Diego).

Audit Process and Implementation

    Each FHWA audit conducted under the Pilot Program is planned to 
ensure a pilot State's compliance with the commitments in its MOU 
with FHWA. FHWA does not evaluate specific project-related decisions 
made by the State because these decisions are the sole 
responsibility of the pilot State. However, the scope of the FHWA 
audits does include the review of the processes and procedures used 
by the pilot State to reach project decisions in compliance with MOU 
section 3.2.
    Also, Caltrans committed in its Application (incorporated by 
reference in MOU section 1.1.2) to implement specific processes to 
strengthen its environmental procedures in order to assume the 
responsibilities assigned by FHWA under the Pilot Program. The FHWA 
audits review how Caltrans is meeting each commitment and assesses 
Pilot Program performance in the core areas specified in the Scope 
of the Audit section of this report.
The Caltrans' Pilot Program commitments address:
     Organization and Procedures under the Pilot Program
     Expanded Quality Control Procedures
     Independent Environmental Decisionmaking
     Determining the NEPA Class of Action
     Consultation and Coordination with Resource Agencies
     Issue Identification and Conflict Resolution Procedures
     Recordkeeping and Retention
     Expanded Internal Monitoring and Process Reviews
     Performance Measures to Assess the Pilot Program
     Training to Implement the Pilot Program
     Legal Sufficiency Review.
The FHWA audit team included representatives from the following 
offices or agencies:
     FHWA Office of Project Development and Environmental 
Review
     FHWA Office of Chief Counsel
     FHWA Alaska Division Office
     FHWA Resource Center Environmental Team
     Volpe National Transportation Systems Center
     Advisory Council on Historic Preservation
     U.S.D.A. Forest Service.

During the onsite audit, FHWA interviewed more than 75 Caltrans 
staff (from both the Capital and Local Assistance programs) in the 3 
District offices and Caltrans' Legal Division staff in each of its 4 
offices. The audit team interviewed a cross-section of staff 
including top senior managers, senior environmental planners, 
generalists, associate planners, and technical experts. The audit 
also included a review of the project files and records for over 30 
projects managed under the Pilot Program.
    FHWA acknowledges that Caltrans identified specific issues 
during its second self-assessment performed under the Pilot Program 
(required by MOU section 8.2.6), and has processes in place to work 
towards resolving each issue. Some issues described in the Caltrans 
self-assessment may overlap with FHWA findings in this audit report. 
This audit report documents findings within the scope of the audit 
and as of the dates of the onsite portion of the audit.
    In accordance with MOU section 11.4.1, FHWA provided Caltrans 
with a 30-day comment period to review the draft audit report. FHWA 
reviewed the comments received from Caltrans and revised sections of 
the draft report, where appropriate, prior to publishing it in the 
Federal Register for public comment.

Progress Since the Last Audit

    As part of the second FHWA audit of the Caltrans' Pilot Program, 
FHWA verified that Caltrans demonstrated continued compliance in the 
``Compliant'' findings areas identified

[[Page 76093]]

in the first audit in January 2008. These compliant findings were:
    1. Legal Sufficiency--Caltrans' Legal Division has developed a 
consistent process to conduct formal legal sufficiency reviews by 
attorneys (and has provided basic legal sufficiency training to each 
reviewing attorney).
    2. Establish Pilot Program Policies and Procedures--Caltrans 
currently, in general, complies with MOU section 1.1.2 commitments 
to establish Pilot Program policy and procedural documentation (as 
detailed in Caltrans' Application).
    3. Background NEPA Training--Caltrans' existing Environmental 
Staff Development Program, outlined in the Application, has 
processes in place to ensure that Environmental Staff involved in 
NEPA documentation have the underlying foundational skill sets 
required in addition to the added skills required to address 
responsibilities under the Pilot Program.
    4. Training Plan--Caltrans conducted a training needs assessment 
specific to the Pilot Program and developed a training plan titled 
``Caltrans Surface Transportation Project Delivery Pilot Program 
Training Plan (Oct. 1, 2007).''
    5. Interagency Agreements that Involve Other Agencies as 
Signatories--Caltrans complied with MOU section 5.1.5 as it pertains 
to the National Historic Preservation Act, Section 106 Programmatic 
Agreement (PA) by completing an addenda to the PA within 6 months 
after the effective date of the MOU to reflect Caltrans' assignment 
of authority under the Pilot Program.
    6. State Commitment of Resources--The initial evaluation of 
resources to implement the Pilot Program and the assignment of 
resources, as of the date of the first audit, is compliant with MOU 
section 4.2.

FHWA also evaluated progress in resolving ``Deficient'' and ``Needs 
Improvement'' audit findings from the first FHWA audit.
     Caltrans addressed ``Deficient'' audit findings from 
the January 2008 audit as follows:
    (1) Statement Regarding Assumption of Responsibility--The 
required statement regarding assumption of responsibility required 
by MOU section 3.2.5 appeared on the cover page of each 
environmental document reviewed in the second audit.
    (2) Records Management--Caltrans demonstrated progress in the 
area of records management. The audit team confirmed that project 
files were present in Districts 7, 8, and 11 as required under the 
Caltrans Uniform Filing System (UFS). Caltrans is working towards 
full compliance of the implementation of MOU section 8.3, the 
Caltrans Application (Section 773.106(b)(3)(i) and (ii)), and the 
Caltrans Standard Environmental Reference (SER) Chapter 38.
    (3) QA/QC Process--The audit team observed progress in 
implementing the Quality Assurance/Quality Control (QA/QC) process 
for environmental documents developed under the Pilot Program in the 
following areas:
    a. Completion of the Quality Control Certification forms--The 
completion of the Internal and External Quality Control Reviews 
Certification forms improved based on FHWA audit team project file 
reviews completed in Districts 7, 8, and 11 during the second audit.
    b. Peer Reviewer--In April 2008, Caltrans revised Chapter 38 of 
the SER to clarify the description of the peer reviewer function for 
the QA/QC process for environmental documents produced under the 
Pilot Program. All of the QC forms reviewed by FHWA in Districts 7, 
8, and 11 that were prepared after the change to the SER complied 
with this requirement.
    c. Internal and External Quality Control Reviews--Caltrans 
revised the Internal and External QC certification forms and the 
Environmental Document Preparation and Review Tool (Environmental 
Document Checklist) to address feedback from Caltrans staff, the 
initial Caltrans self-assessment, and the January 2008 FHWA audit.
     Caltrans addressed ``Needs Improvement'' audit findings 
from the January 2008 audit as follows:
    (1) QA/QC Process Related to SER Chapter 38 Procedural and 
Policy Changes--Caltrans has created a new section in the SER, 
titled ``SER Posting History,'' which presents a chronology of 
changes made in the SER (i.e., SER chapter changed, date of change, 
summary of change).
    (2) Self-assessment issues and corrective actions--The second 
self-assessment completed by Caltrans correlated each identified 
issue needing improvement to the corrective action(s) being taken to 
address each issue.
    (3) QA/QC process implementation and documentation--Caltrans 
revised SER Chapter 38 in April 2008 to clarify the QA/QC process 
requirements, the technical specialist review, the internal peer 
review, the class of action determination, signature authorities, 
and the options each District may use to communicate that an 
environmental document is ready for signature. Through interviews 
with staff in the four Caltrans Districts (Districts 4, 7, 8, and 
11) visited, the audit team determined that the Districts are using 
some format of a ``Ready for Signature'' QC form to transmit to the 
District Deputy Director that the environmental document is ready 
for signature.

Key Elements of Implementation

    One of the purposes of each FHWA audit of a State Pilot Program 
is to identify and collect information for consideration by 
potential future Pilot Program participants. Key elements that are 
being used by Caltrans in the implementation of the Pilot Program 
include their SER, particularly Chapter 38-NEPA Delegation, Caltrans 
annotated outlines for environmental documents, quality control 
certification forms, environmental document review checklists, and 
monthly NEPA delegation statewide teleconferences.
    During the interviews and project files reviews completed in 
Districts 7, 8, and 11, the audit team observed the following 
effective practices:
    (1) Use of standard ``spreadsheet'' template to convey the 
comments of HQ NEPA coordinators on environmental documents to 
District staff--Through interviews with HQ NEPA coordinators and 
review of project files, the audit team observed a systematic 
mechanism used to communicate comments on environmental documents. 
The HQ NEPA coordinator consolidates the comments on each 
environmental document reviewed and provides the comments to the 
District point of contact via a standard ``spreadsheet'' template. 
The template file includes information on each document section, the 
comment and action needed, and identifies the commenter. The audit 
team identified records of these communications in project files. 
This approach provides a systematic and transparent mechanism to 
transfer and document communications between HQ and District staff 
on environmental documents.
    (2) Use of intranet sites at Districts to access Pilot Program 
materials and documents--The audit team determined through 
interviews with staff at Districts 7, 8, and 11 that each of these 
Districts use an intranet site (not accessible to the public) to 
post District specific documents related to the Pilot Program. 
Maintaining an internal system for all users at the District to 
access the latest District specific Pilot Program documents provides 
for improved consistency in implementing the Pilot Program.
    (3) File transfer as standard operating procedure when 
transferring projects between staff--The audit team determined 
through interviews with Caltrans staff that file transfer procedures 
were in selective use at some Districts visited during the audit, to 
address employee turnover or the transitioning of projects between 
staff. File transfer practices include a file transfer meeting where 
the generalist hands off all documents to the Senior Planner 
overseeing the individual's work.

Overall Audit Opinion

    Based on the information reviewed, it is the FHWA audit team's 
opinion that to date, Caltrans has been carrying out the 
responsibilities it has assumed in keeping with the intent of the 
MOU and the Application. During the onsite audit, Caltrans staff and 
management continued to indicate ongoing interest in obtaining 
constructive feedback on successes and areas for improvement. By 
addressing the findings in this report, Caltrans will continue to 
move the program toward success.

Findings Definitions

    The FHWA audit team carefully examined Pilot Program areas to 
assess compliance in accordance with established criteria (i.e., 
MOU, Application). The time period covered by this second audit 
report is from the start of the Caltrans Pilot Program (July 1, 
2007) through completion of the second onsite audit (August 1, 
2008). This report presents audit findings in three areas:
     Compliant--Audit verified that a process, procedure or 
other component of the Pilot Program meets a stated commitment in 
the Application for Assumption and/or MOU.
     Needs Improvement--Audit determined that a process, 
procedure or other component of the Pilot Program as specified in 
the Application for Assumption and/or MOU is not fully implemented 
to achieve the stated

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commitment or the process or procedure implemented is not 
functioning at a level necessary to ensure the stated commitment is 
satisfied. Action is recommended to ensure success.
     Deficient--Audit was unable to verify if a process, 
procedure or other component of the Pilot Program met the stated 
commitment in the Application for Assumption and/or MOU. Action is 
required to improve the process, procedure or other component prior 
to the next audit; or
    Audit determined that a process, procedure or other component of 
the Pilot Program did not meet the stated commitment in the 
Application for Assumption and/or MOU. Corrective action is required 
prior to the next audit.

Summary of Findings--July 2008

Findings--Compliant

    (C1) Training of Legal Division Staff--In compliance with MOU 
section 12.1.1 and section 773.106(b)(3)(iii) of Caltrans' 
Application, Caltrans' Legal Division maintains a staff of qualified 
attorneys supporting the Pilot Program and tracks the trainings 
attended by each attorney. Attorney training is organized into five 
core areas (Legal Sufficiency, Section 4(f), Section 7 of the 
Endangered Species Act, Environmental Tools (internal to Caltrans), 
and Audit). Additionally, the four Assistant Chief Counsels (ACC) 
with environmental law responsibilities work together to identify 
additional training opportunities available statewide. Each ACC has 
approval authority to fund additional training opportunities for 
attorneys on their team.
    (C2) Conformity Determinations--Section 8.5 of the MOU requires 
that FHWA's California Division Office document the project level 
conformity determination by transmitting a letter to Caltrans to be 
included in the Final Environmental Impact Statement (EIS) or 
Environmental Assessment (EA). Based on interviews with Caltrans 
staff and review of 15 project files, conformity decisions were 
completed in accordance with MOU section 8.5.

Findings--Needs Improvement

    (N1) Commitment of Resources--Section 4.2.2 of the MOU requires 
Caltrans to maintain adequate organizational and staff capability to 
effectively carry out the responsibilities it has assumed. 
Interviews with Caltrans District staff working on Capitol Projects 
revealed that the Work Breakdown Structure (WBS) code established to 
track actual time spent on Pilot Program activities is not used in a 
consistent manner. Inconsistent use and understanding of the WBS 
code to track labor expenditures under the Pilot Program provides 
inaccurate information on the resources used to support the Pilot 
Program. Caltrans should continue to clearly define, communicate and 
emphasize consistent use of the WBS to staff supporting the Capital 
Projects component of the Pilot Program, which activities to track 
using the designated WBS code for the Pilot Program.
    Interviews with Caltrans District staff working on Local 
Assistance Projects revealed an inability to track actual time spent 
on Pilot Program activities through the use of the Expenditure 
Authorization system.
    Given this two part finding, it is unclear whether Caltrans is 
able to accurately and fully assess the current and future resource 
needs for implementation of the Pilot Program.
    (N2) District Training Approaches and Implementation--MOU 
section 4.2.2 requires Caltrans to maintain adequate organizational 
and staff capability to effectively carry out the responsibilities 
it has assumed under the Pilot Program. A fundamental component of 
staff capability is maintaining a training program that ensures 
staff competency to meet Pilot Program responsibilities. The 
responsibility of identifying individual staff training needs 
largely falls to managers at the District level. Audit observations 
in the three Districts visited (Districts 7, 8, and 11) during this 
audit, along with the one District visited (District 4) during the 
previous audit, confirmed that considerable variation in training 
approaches exist between District managers, which can result in 
potentially widely varying levels of competency among staff. This 
variation in staff training levels could affect staff competency 
levels and compliance with commitments under the Pilot Program. As 
Caltrans HQ and Districts continue to assess and address staff 
training needs, Caltrans needs to actively monitor how District 
staff training needs are assessed and demonstrate consistency among 
and within Districts in the delivery of training in order to achieve 
a sufficient level of competency among all associated staff. 
Inconsistencies identified through Caltrans self-assessments and 
audit findings also serve as a source to identify training needs, 
including:
    (a) Project Files--When to initiate a project file and what 
information it should contain;
    (b) Internal QA/QC Certification Form--Who the reviewers should 
be and when they should sign the form;
    (c) Class of action determinations--What documentation is used, 
when a determination is required, and who must be involved;
    (d) Differentiating between Categorical Exclusions (CE) that 
fall under section 6004 and section 6005 MOUs between Caltrans and 
FHWA; and
    (e) What approvals and decisions are to be included in quarterly 
reports on the Pilot Program and at what project stage they are to 
be reported;
    (f) Environmental document transmittals for the legal 
sufficiency process; and
    (g) Environmental document and project file transmittals to 
transfer projects between staff.
    (N3) Performance Measure Evaluation--MOU section 10.1.1 requires 
Caltrans to develop performance measures for the Pilot Program. MOU 
section 10.1.2 requires FHWA to evaluate these performance measures 
during the audits and include the evaluation in the audit reports.
    FHWA noted the following areas in need of improvement with 
respect to two Pilot Program performance measures--``Timely 
Completion of NEPA Process'' and ``Compliance with NEPA and other 
Federal laws and regulations.''
    (a) Performance Measure: Timely Completion of NEPA Process.
    (i) Caltrans measures the time to complete the environmental 
document review and approval process for draft and final documents. 
While the document review component is one element that Caltrans may 
use to evaluate performance under the Pilot Program, this 
performance measure evaluates a relatively minor part of the overall 
project timeline. In all cases where this current measure is 
reported, Caltrans needs to provide full disclosure of the 
limitations of the measure, preferably noting that the time period 
covered is only a small part of the overall NEPA process. Caltrans 
should consider expanding this measure to include other elements 
assumed under the Pilot Program to more robustly evaluate the timely 
completion of the NEPA process.
    (ii) Caltrans uses baseline data to evaluate progress since 
assuming Pilot Program responsibilities. Thirty-five environmental 
documents reviewed and approved prior to the effective date of the 
MOU (34 EAs and 1 EIS) are used to draw from for performance measure 
purposes. Variables such as project size, scope, and complexity, as 
well as any required scheduling coordination with resource agencies, 
could affect the start time of document reviews and as such any 
comparisons with Pilot Program projects need to consider these 
factors. The current approach of using the median time from the 
beginning of the administrative review process for a document to the 
document approval date, prior to and during the Pilot Program does 
not provide a realistic or reliable basis of comparison. At a 
minimum, the metric does not account for the type of document being 
reviewed or any of the other variables involved in the projects. A 
more effective representation of project timing would be to compare 
the timing of projects prior to and during the Pilot Program by 
document type (i.e., compare EIS projects to EIS projects) and other 
relevant variables, such as project size, scope and complexity.
    (b) Performance Measure: Compliance with NEPA and other Federal 
laws and regulations (Maintain documented compliance with 
requirements of all Federal laws and regulations being assumed). 
Caltrans measures performance by evaluating the percentage of 
environmental documents (draft and final) with a completed 
Environmental Document Preparation and Review Tool and Internal 
Certification Environmental Document Quality Control Reviews form. 
Caltrans set at the start of the Pilot Program a desired outcome of 
this performance measure of a 100 percent completion rate. Based on 
the results of the first two Caltrans self-assessments, the 
acceptable completion rate was modified to a phased-in approach over 
a two-year period of time (increasing from 75 percent to 95 
percent).
    The audit team was unable to identify the basis Caltrans used to 
modify the acceptable completion rate for this performance measure. 
As Caltrans is using the completion of the Environmental Document 
Preparation and Review Tool and Internal Certification Environmental 
Document Quality Control Reviews form as a method of demonstrating

[[Page 76095]]

compliance with NEPA and other Federal laws and regulations, a 
completion rate of less than 100 percent would not correlate with 
the demonstration of compliance with assumed responsibilities under 
the Pilot Program.
    For every compliance related performance measure that is not at 
100 percent, Caltrans needs to document each item of noncompliance 
in the project file and correct each deficiency identified.
    Caltrans (with FHWA involvement under MOU section 10.1.1) needs 
to develop an approach to evaluate the effectiveness of each 
performance measure and to establish a process to communicate 
changes implemented for each performance measure.
    (N4) Quarterly Reports--The quarterly reports Caltrans provides 
to FHWA under section 8.2.7 of the MOU have not consistently 
included an accurate listing of all approvals and decisions under 
the Pilot Program. Quarterly reports received by FHWA have been 
revised and resubmitted by Caltrans to address reporting data gaps. 
Audit team review of the content of the quarterly reports and 
discussions with Caltrans staff who develop input for the quarterly 
reports suggested that the processes leading to report production is 
inconsistent in approach to what approvals and decisions are to be 
reported Caltrans HQ by the District offices. Clear guidance to the 
Districts is needed on what approvals and decisions are to be 
reported and at what stage they are to be reported.
    (N5) Varying Understanding of Section 6004/Section 6005 CEs--
Sections 3.1.1 and 3.1.2 of the MOU define the scope of assignment 
in terms of the Section 6004 MOU (State Assumption of Responsibility 
for the Categorical Exclusion program, 23 U.S.C. 326). An 
inconsistent understanding of determinations of Section 6005 versus 
Section 6004 project applicability was identified from interviews 
and review of project files during the audit. For each CE, District 
staff need to understand the purpose, use of Caltrans procedures 
associated with CEs and consistently complete and maintain in the 
project file the Categorical Exemption/Categorical Exclusion 
Determination form and the Categorical Exclusion Checklist.
    (N6) Creating and Maintaining Project File Protocols--Section 
8.2.4 of the MOU requires that Caltrans maintain project files that 
include all letters and comments received from governmental 
agencies, the public, and others relating to the Pilot Program 
responsibilities. In addition, section 8.2.5 of the MOU requires 
Caltrans to review and monitor project file documentation thorough 
its QA/QC process. In District 7, 8, and 11, the audit team 
identified a lack of consistent filing and record keeping procedures 
related to the storage of electronic communications. Caltrans does 
not maintain a systematic process and has not established formal 
directives regarding electronic correspondence and/or documents, a 
lack which could result in the loss of electronic data.
    (N7) Maintenance of Project and General Administrative Files--
Section 8.2.4 of the MOU requires Caltrans to maintain project and 
general administrative files pertaining to its discharge of the 
responsibilities assumed under the Pilot Program. The audit team 
identified inconsistencies with established project files 
maintenance procedures through file reviews conducted during the 
audit. The following inconsistencies were noted:
    (a) Files with incomplete and/or missing required documentation;
    (b) files missing UFS file tabs;
    (c) electronic correspondence and data not printed and/or 
located in the project file; and
    (d) project file materials maintained separately from the 
project file.
    Additionally, the audit team identified a lack of direction and 
consistency among Caltrans staff on what items should be included in 
the official administrative file. A lack of consistency of filing 
procedures existed among generalists interviewed during the audit.
    (N8) Establishment of Environmental Project Files--The audit 
team observed a lack of clear understanding and inconsistent 
implementation among Caltrans staff on when to establish 
environmental project files. SER Chapter 38 ``Instructions for Using 
the UFS'' states ``Establishing environmental project files based on 
this UFS as soon as environmental studies begin, and maintaining 
these files are mandatory.''
    (N9) QA/QC Process Implementation--The Caltrans QA/QC process 
developed to comply with section 8.2.5 of the MOU has not been 
consistently implemented for all projects assumed under the Pilot 
Program. Caltrans requires that each environmental document be 
reviewed according to the processes established in the policy memo 
``Environmental Document Quality Control Program under the NEPA 
Pilot Program'' (July 2, 2007). The audit team identified through 
interviews with Caltrans staff and through project files reviews 
that an inconsistent understanding and implementation of the steps 
in the QA/QC process for environmental documents existed.
    The audit identified a general lack of understanding of the 
purpose of the use of the Internal Certification with respect to its 
role in the Pilot Program responsibilities assumed. This lack of 
understanding involves the overall reasoning and logic for the 
comprehensive progression of authorities of the reviews needed in 
completion of the certification form. The audit identified a lack of 
clear understanding among Caltrans staff that the environmental 
branch chief must be the final signatory. Considering these 
misunderstandings and the deficient finding (D2) below, the Audit 
team recommends that Caltrans evaluate the use of the QC 
Certification Forms to assess whether the intended goals of its use 
are being met.

Findings--Deficient

    (D1) Performance Measure--Section 10.1.3 of the MOU requires 
Caltrans to collect data and monitor its progress in meeting the 
performance measures in section 10.2 of the MOU, including 
performance measure 10.2.1(C)(i): ``Assess change in communication 
among Caltrans, Federal and State resource agencies, and the 
public.'' Currently, Caltrans has no metric to evaluate this 
performance measure.
    (D2) QA/QC Certification Process--To comply with MOU section 
8.2.5 and SER Chapter 38, Caltrans requires staff to review each 
environmental document in accordance with the policy memo titled 
``Environmental Document Quality Control Program under the NEPA 
Pilot Program'' (July 2, 2007). The audit team observed the 
following deficiencies through Caltrans staff interviews and project 
file reviews:
    (a) SER Chapter 38 section, ``Quality Control Program,'' 
requires the environmental branch chief's ``quality control 
review,'' to always constitute the last review. In six instances 
identified by the audit team, the environmental branch chief was not 
the final reviewer based on the dates indicated on the forms.
    (b) The SER Chapter 38 requires that the Caltrans' independent 
review of the environmental document not begin until the External QC 
Certification form has been completed. It was observed in three 
instances that the completion of the Internal Certification QC form 
predated the completion of the External Certification QC form.
    (D3) Submission of Environmental Documents for Legal Review--
Three of the four environmental documents the audit team identified 
as having undergone legal review prior to the July 2008 audit were 
not submitted in accordance with the procedures specified in the 
Division of Environmental Affairs (DEA) memorandum dated July 2, 
2007, ``Environmental Document Quality Control Program under the 
NEPA Pilot Program'' (nor, by reference, the then-operative October 
15, 2007, Caltrans Legal Division memorandum, ``Procedures for 
Determining Legal Sufficiency for Environmental Documents under the 
NEPA Pilot Program''). The procedural deviations identified are as 
follows:
    (a) One NEPA environmental assessment, meeting Caltrans' 
criteria for a ``Complex EA'' per the July 2, 2007, DEA memorandum 
(public controversy and controversy over project purpose), underwent 
legal review prior to approval without the program office having 
provided the reviewing attorney any of the supporting documentation 
for ``Complex EAs'' required by the July 2, 2007, and October 15, 
2007, memoranda.
    (b) Two other transmittals were sent to request the initiation 
of the formal Legal Sufficiency review without the reviewing 
attorney having been provided all six items required by the July 2, 
2007, and the October 15, 2007, memoranda. In those cases, however, 
the attorney did eventually receive all required items.
    (c) It was observed that a District's transmittal of a Final EIS 
for Legal Sufficiency review predated the Environmental Branch 
Chief's certification on the Internal Certification form. The SER 
Chapter 38 requires that the transmittal to the Legal Division will 
include the completed and signed Internal and External QC 
certification forms.
    (D4) Environmental Document Process--Class of Action 
Determinations--The audit team found an inconsistent understanding 
and implementation of the process for documentation of class of 
action

[[Page 76096]]

determinations and concurrences. The NEPA process, dictates that the 
thought process and analysis necessary for the determination of the 
class of action for a project should be documented as part of the 
project's record-keeping. Sections 771.111(a) and (b) of Title 23, 
Code of Federal Regulations discuss the determination and 
identification of the class of action for a project and to verify 
compliance with these regulations requires some documentation.
    Additionally, Chapter 38 of the SER provides a means of 
documenting class of action determinations via the Preliminary 
Environmental Analysis Report for State Highway System projects or 
via the Preliminary Environmental Study form for Local Assistance 
projects. The procedures also require class of action determinations 
for all EAs (including Complex EAs) and EISs to be made with the 
concurrence of the Headquarters Environmental Coordinator. The SER 
states that, ``obtaining the concurrence of the Headquarters 
Environmental Coordinator may be done through an e-mail which 
includes the project description, proposed class of action, and 
rationale. The Coordinator's e-mail response will provide 
concurrence.''
    The audit team observed through project file review in the 3 
Districts visited, the process described in the SER was not 
consistently followed. In more than six instances, project files did 
not contain any record of a class of action determination or 
concurrence. This area was cited as Needs Improvement in the January 
2008 audit. Interviews with Caltrans staff and review of project 
files showed varying understanding and compliance with the SER and 
with Caltrans Application section 773.106 (b)(3)(ii) and MOU section 
5.1.1 regarding procedural and substantive requirements.

 [FR Doc. E8-29628 Filed 12-12-08; 8:45 am]
BILLING CODE 4910-22-P