Surface Transportation Project Delivery Pilot Program; Caltrans Audit Report, 75532-75539 [2010-30326]

Agencies

• Federal Highway Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 75, Number 232 (Friday, December 3, 2010)]
[Notices]
[Pages 75532-75539]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-30326]


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DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

[FHWA Docket No. FHWA-2010-0151]


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. To ensure compliance by each State participating in the 
Pilot Program, 23 U.S.C. 327(g) mandates semiannual audits during each 
of the first 2 years of State participation. This notice announces and 
solicits comments on the fifth audit report for the California 
Department of Transportation (Caltrans).

DATES: Comments must be received on or before January 3, 2011.

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,

[[Page 75533]]

(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 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) that established 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.
    To ensure compliance by each State participating in the Pilot 
Program, 23 U.S.C. 327(g) 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. 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 fifth audit report for Caltrans and solicits public 
comment on same.

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

    Issued on: November 24, 2010.
Victor M. Mendez,
Administrator.

Surface Transportation Project Delivery Pilot Program

Federal Highway Administration Audit of California Department of 
Transportation

July 26-30, 2010

Overall Audit Opinion

    Based on the information reviewed, it is the Federal Highway 
Administration (FHWA) audit team's opinion that as of July 30, 2010, 
the California Department of Transportation (Caltrans) continued to 
make progress toward meeting all responsibilities assumed under the 
Surface Transportation Project Delivery Pilot Program (Pilot Program), 
as specified in the Memorandum of Understanding (MOU) \1\ with FHWA and 
in Caltrans' Application for Assumption (Application).
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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 FHWA commends Caltrans for its implementation of corrective 
actions in response to previous FHWA audit report findings. The FHWA 
also observed that Caltrans continued to identify and implement on a 
statewide Pilot Program basis best practices in use at individual 
Caltrans Districts (Districts).
    With the completion of FHWA's fifth audit, Caltrans has now 
operated under the Pilot Program for 3 years. In compliance with the 
time specifications for the required audits, FHWA completed four 
semiannual audits in the first 2 years of State participation and has 
begun the annual audit cycle, beginning with this audit, which was 
completed July 30, 2010. Collectively, the FHWA audits have included 
on-site audits to 9 of the 12 Districts and to the Caltrans Regional 
Offices supporting the remaining 3 Districts. The audit team continues 
to identify significant differences across the Districts in terms of 
implementing Pilot Program policies, procedures, and responsibilities. 
Examples of such differences include: resource availability and 
allocation; methods of implementation; methods of process evaluation 
and improvement; and levels of progress in meeting all assumed 
responsibilities. It is the audit team's opinion that the highly 
decentralized nature of operations across Districts continues to be a 
major contributing factor to the variations observed in the Pilot 
Program. As a result of this organizational structure, clear, 
consistent, and ongoing oversight by Caltrans Headquarters (HQ) over 
Districts' implementation and operation of the Pilot Program 
responsibilities is necessary. A robust oversight program will help 
foster the exchange of information and the sharing of best practices 
and resources between Districts and will put the entire organization in 
a better position to more fully implement all assumed responsibilities 
and to meet all Pilot Program commitments.
    Due to the multiyear timeframes associated with more complex and 
controversial projects, the full lifecycle of the environmental review 
aspect of project development (proceeding from initiation of 
environmental studies and concluding with the issuance of a Record of 
Decision or equivalent decision document) has yet to be realized within 
the Pilot Program to date. Caltrans continues to gain experience in 
understanding the resource requirements and processes necessary to 
administer its Program. It is the audit team's opinion that Caltrans 
needs to maintain this continuous process improvement to refine its 
approaches and use of resources to meet all Pilot Program commitments, 
especially given the increasing resource demands associated with 
managing ever-more complex and controversial projects under the Pilot 
Program.
    Caltrans staff and management continue to request feedback from the 
FHWA audit team regarding program successes, best practices, and areas 
in need of improvement. By addressing all findings in this report, 
Caltrans will continue to move toward full compliance with all assumed 
responsibilities and Pilot Program commitments.
    As of the conclusion of the fifth FHWA audit, Caltrans has 
participated in the Pilot Program for 3 years. It is FHWA's opinion 
that Caltrans has continued to improve its processes and procedures and 
has benefited from participation in the Pilot Program. However, it also 
is FHWA's opinion that while Caltrans participation in the Pilot 
Program has been successful thus far, it is still functioning in a 
development context and has yet to reach full maturity. Ongoing repeat 
findings and program areas still in the process of being developed or 
improved contributed to this opinion.

Requirement for Transition Plan

    The Safe, Accountable, Flexible, Efficient Transportation Equity 
Act: A Legacy for Users (SAFETEA-LU) Section 6005(a) established the 
Pilot Program, codified at 23 U.S.C. 327. Under the provisions of 23 
U.S.C. 327(i)(1), ``the program shall terminate

[[Page 75534]]

on the date that is 6 years after the date of enactment of this 
section'' which will be August 10, 2011. Additionally, in accordance 
with the MOU between FHWA and Caltrans, Caltrans and FHWA must jointly 
``develop a plan to transition the responsibilities that Caltrans has 
assumed back to the FHWA so as to minimize disruption to the project, 
minimize confusion to the public, minimize burdens to other affected 
Federal, State, and local agencies, and, ensure, to the maximum extent 
possible, Caltrans will be able to complete by August 10, 2011, all 
anticipated environmental approvals.'' The transition plan must be 
completed and approved by both Caltrans and FHWA no later than March 
10, 2011. New legislation is required in order for the Pilot Program to 
be extended.

Effective Practices

    The FHWA audit team observed the following effective practices 
during the fifth audit:
    1. Caltrans HQ has sought out, shared, and implemented (or is 
implementing) best practices in use at the District level to use on a 
statewide basis. Examples include:
    (a) Use of a standard form to document Class of Action 
determination;
    (b) Use of the File Maker Pro environmental database system to 
track projects and milestones; and
    (c) Creation of a Section 4(f) point of contact in each District to 
serve as a technical resource for District staff.
    2. Use of monthly newsletters and e-mails from HQ environmental 
coordinators to inform District environmental staff of key issues, 
timely topics, and changes in practices.
    3. The Sacramento Legal Office permanently assumed responsibility 
for all environmental law issues in two Districts where staff turnover 
resulted in limited expertise to support legal sufficiency reviews. As 
the number of legal sufficiency reviews performed under the Pilot 
Program has not been significant, concentrating reviews amongst a key 
group of attorneys should assist with a consistent level of review of 
environmental documents and the development of expertise under the 
Pilot Program.
    4. Development of an on-line training course on Section 4(f) 
determinations that is nearing completion.
    5. Expansion of the scope of the Caltrans self-assessment process 
to include review of Pilot Program areas identified as potential 
weaknesses by HQ Environmental Coordinators.
    6. A variety of approaches are being used by individual Districts 
to capture, track, and ensure that environmental commitments identified 
in environmental documents are being met. Identified District specific 
approaches used to accomplish this include:
    (a) Training environmental staff in environmental commitments 
tracking;
    (b) Dedicating resources to track commitments, ensuring that the 
commitments are circulated at key stages of the project cycle, and 
checking that the commitments have been met at the completion of a 
project;
    (c) Using dedicated formats to capture, describe, and ensure that 
environmental commitments are transferred and incorporated into 
contract documents;
    (d) Requiring environmental awareness training for construction 
personnel prior to the start of construction; and
    (e) Training appropriate staff on incorporation of environmental 
commitments into plan, specification, and estimate packages.

Background

    The Pilot Program allows the Secretary of Transportation 
(Secretary) to assign, and the State to assume, the Secretary's 
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 is liable for carrying out the responsibilities 
it has assumed, in lieu of the 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 2 years 
of State participation; and annual audits during each subsequent year 
of State participation. The focus of the FHWA audit process is four-
fold: (1) To assess a Pilot State's compliance with the required MOU 
and applicable Federal laws and policies; (2) to collect information 
needed to evaluate the success of the Pilot Program; (3) to evaluate 
Pilot State progress in meeting its performance measures; and (4) to 
collect information for use in 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 published in the Federal Register. 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.
    Caltrans published its draft Application to participate in 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 Federal agencies, reviewed and approved the 
Application. Then on June 29, 2007, Caltrans and FHWA entered into an 
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.

Scope of the Audit

    This is the fifth FHWA audit of Caltrans participation in the Pilot 
Program. The on-site portion of the audit was conducted in California 
from July 26 through July 30, 2010. As required in SAFETEA-LU, each 
FHWA audit must assess compliance with the roles and responsibilities 
assumed by the Pilot State in the MOU. The audit also includes 
recommendations to assist Caltrans in successful participation in the 
Pilot Program.
    The audit primarily focused on assessing compliance with assumed 
responsibilities. Key Pilot Program areas evaluated during this audit 
included:
     Section 4(f) process determination and documentation;
     The reevaluation process;
     The impact of furloughs and loss of staff;
     Project files;
     Resource agency consultation and coordination;
     Training;
     Quarterly reports;
     Quality Assurance Quality Control (QA/QC) process; and
     NEPA process documentation.
    Prior to the on-site audit, FHWA completed telephone interviews 
with Federal resource agency staff at the U.S. Army Corps of Engineers 
(USACE), the National Park Service, the National Oceanic and 
Atmospheric Administration, the Advisory Council on Historic 
Preservation, and the Environmental Protection Agency. The

[[Page 75535]]

on-site audit included visits to the Caltrans Offices in District 3/
North Region (Marysville), District 4 (Oakland), District 5 (San Luis 
Obispo), District 7 (Los Angeles), District 8 (San Bernardino), and 
District 12 (Irvine). Additionally, FHWA auditors visited the 
Sacramento offices of the USACE and U.S. Fish and Wildlife Service 
(FWS) to interview staff.
    This report documents findings within the scope of the audit as of 
the completion date of the on-site audit on July 30, 2010.

Audit Process and Implementation

    The intent of each FHWA audit completed under the Pilot Program is 
to ensure that each Pilot State complies with the commitments in its 
MOU with FHWA. The 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 FHWA audit scope does 
include the review of the processes and procedures (including 
documentation) used by the Pilot State to reach project decisions in 
compliance with MOU Section 3.2.
    In addition, 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 QC Procedures.
     Independent Environmental Decisionmaking.
     Determining the NEPA Class of Action.
     Consultation and Coordination with Resource Agencies.
     Issue Identification and Conflict Resolution Procedures.
     Record Keeping 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 team for the fifth audit included representatives from the 
following offices or agencies:
     FHWA Office of Project Development and Environmental 
Review.
     FHWA Office of the Chief Counsel.
     FHWA Alaska Division Office.
     FHWA Resource Center Environmental Team.
     Volpe National Transportation Systems Center.
     FWS.
    During the onsite audit, FHWA interviewed more than 70 staff from 6 
District offices and the USACE and FWS. The audit team also reviewed 
project files and records for over 80 projects managed by Caltrans 
under the Pilot Program.
    The FHWA acknowledges that Caltrans identified specific issues 
during its fifth self-assessment performed under the Pilot Program 
(required by MOU section 8.2.6), and is working on corrective actions 
to address the identified issues. Some issues described in the Caltrans 
self-assessment may overlap with FHWA findings identified in this audit 
report.
    In accordance with MOU Section 11.4.1, FHWA provided Caltrans with 
a 30-day comment period to review this draft audit report. The FHWA 
reviewed comments received from Caltrans and revised sections of the 
draft report, where appropriate, prior to publishing it in the Federal 
Register for public comment.

Limitations of the Audit

    The conclusions presented in this report are opinions based upon 
interviews of selected persons knowledgeable about past and current 
activities related to the execution of the Pilot Program at Caltrans, 
and a review of selected documents over a limited time period. The FHWA 
audit team's ability to conduct each audit and make determinations of 
Caltrans' compliance with assumed responsibilities and commitments 
under the Pilot Program has been further limited by the following:
     Select Districts visited by FHWA audit team. The FHWA 
audit team has not visited each District during the audit process. Each 
audit (including this audit) has consisted of visits to Districts with 
significant activity under the Pilot.
     Caltrans staff availability during audits. Some Caltrans 
staff selected to be interviewed by the audit team were out of the 
office and unavailable to participate in the onsite audit. This limited 
the extent of information gathering.
     Incomplete project files. Project files and associated 
project documentation have, when reviewed by the audit team, not always 
been complete. This is especially true for projects where the project 
or related studies were initiated prior to commencement of the Pilot 
Program. A full assessment of compliance with Pilot Program policies 
and procedures is not possible unless all required documents are 
available for review.
     Limited scope of Pilot Program project development 
activity. Caltrans has not operated under the Pilot Program for a 
sufficient period of time to manage the full lifecycle of most 
Environmental Impact Statements (EIS) and other complex projects. 
Therefore, FHWA is not yet able to fully determine how Caltrans will 
comply with its responsibilities assumed under the Pilot Program for 
these project situations.
     Insufficient data to determine time savings reported by 
Caltrans in the completion of environmental documents. Due to the short 
period of time that the Pilot Program has been in place, a sufficient 
number of projects of varying complexities have not been completed to 
adequately support a determination on the potential time savings 
resulting from participation in the Pilot Program.
     Distinction between the two Categorical Exclusion (CE) 
assumption processes--Section 6004 and Section 6005. Since the 
assumption by Caltrans of the SAFETEA-LU Section 6004 CE process is not 
a part of these audits, it is not possible to validate the correctness 
of determinations placing individual CEs under the aegis of each 
assumed responsibility.
     Continued errors in the quarterly reports. The quarterly 
reports prepared by Caltrans listing all environmental approvals and 
decisions made under the Pilot Program continue to contain omissions 
and errors. As a result, it is difficult for FHWA to exercise full 
oversight on Pilot Program projects unless a complete accounting of all 
NEPA documents produced under the Pilot is available and taken into 
account during the FHWA audit.

Status of Findings Since Last Audit (July 2009)

    As part of the fifth audit, FHWA evaluated the corrective actions 
implemented by Caltrans in response to the ``Deficient'' and ``Needs 
Improvement'' findings in the fourth FHWA audit report.
    1. Quarterly Reports--The quarterly reports Caltrans provided to 
FHWA under MOU Section 8.2.7 continued to include inaccuracies related 
to environmental document approvals and decisions made under the Pilot 
Program. The FHWA does acknowledge that Caltrans is in the process of 
implementing the File Maker Pro environmental database system on a 
statewide basis to assist in the

[[Page 75536]]

developing of a comprehensive database of environmental projects and 
milestones to improve the accuracy of the information reported in the 
quarterly reports.
    2. QA/QC Certification Process--Project file reviews completed 
during the fifth audit continued to identify incorrect and incomplete 
QC certification forms. Caltrans continues to address inadequacies in 
this process through staff specific training when inconsistencies are 
identified, most notably during the self-assessment process.
    3. QA/QC Assurance--Under the Pilot Program, NEPA documentation 
must clearly identify that FHWA has no role in the environmental review 
and decisionmaking process for assigned projects. However, 
environmental document reviews continued to identify instances when 
FHWA was referenced as being involved in the decisionmaking process.
    ``Needs Improvement'' audit findings status:
    1. Inadequate Guidance in the Standard Environmental Reference 
(SER)--Caltrans updated the SER to address FHWA's concerns regarding 
several instances where guidance provided was unclear, misleading, or 
incomplete. However, additional instances were observed during the 
fifth audit regarding unclear, misleading, or incomplete information in 
the SER.
    2. Procedural and Substantive Requirements--The identified areas of 
confusion regarding implementation of the Endangered Species Act (ESA) 
Section 7 process have been addressed and the process of consulting 
with the FWS under ESA Section 7 has been improved.
    3. Section 4(f) Issues:
    (a) Documentation--Project file reviews and interviews with 
Caltrans staff confirmed continuing inconsistencies in the 
documentation required to meet the Section 4(f) provisions.
    (b) Circulation of a Draft Section 4(f) Evaluation--Project file 
reviews and interviews with Caltrans staff identified confusion 
regarding the requirement to circulate Section 4(f) Evaluations to the 
Department of the Interior for review.
    (c) Section 4(f) Implementation--Project file reviews and 
interviews with Caltrans staff identified several inconsistencies with 
the implementation and general understanding required in carrying out 
Section 4(f) provisions.
    Caltrans is continuing to address each issue. For example, Caltrans 
requested and received two FHWA-led Section 4(f) trainings, each 2 days 
in length, with specific requests to address areas that FHWA has 
identified as problematic during the Pilot Program audit. Caltrans is 
also completing an on-line Section 4(f) training that will be posted on 
the ``Training on Demand'' Web site.
    4. Legal Division Staff--Significant variability existed in the 
Federal environmental law experience of the attorneys in the four 
Caltrans legal offices. Most notably, the retirement of a highly 
experienced attorney near the end of 2008 resulted in two of Caltrans' 
legal offices serving some of Caltrans' largest and busiest Districts 
with no attorneys on staff with substantial experience in Federal 
environmental law. Since October 2009, the Sacramento Legal Division 
assumed permanent responsibility for all environmental law issues in 
the legal office affected by the retirement of the experienced attorney 
in 2008.
    5. Training--In the past, inconsistencies in training were 
identified in the areas of Section 4(f) and Section 7 processes. There 
were also observed inconsistencies in the use of tools to identify 
training needs and to track employees' training histories, as well as 
no method for employees to track completion of any online training 
available on the Caltrans Web site. A method to record the completion 
of on-line trainings by Caltrans staff is now available with 
implementation of its use underway.
    6. Maintenance of Project and General Administrative Files--
Caltrans has instituted specific procedures for maintaining project 
files in accordance with the Uniform Filing System (UFS) and has 
provided training on these procedures. Inconsistencies in the 
application of these procedures, reported in previous audit findings, 
were also identified in this audit.

Findings Definitions

    The FHWA audit team carefully examined Pilot Program areas to 
assess compliance in accordance with established criteria in the MOU 
and Application. The time period covered by this audit report is from 
the start of the Caltrans Pilot Program (July 1, 2007) through 
completion of the fifth onsite audit (July 30, 2010) with the focus of 
the audit on the most recent 12 month period. 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 and/or MOU.
     Needs Improvement--Audit determined that a process, 
procedure or other component of the Pilot Program as specified in the 
Application and/or MOU is not fully implemented to achieve the stated 
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 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 
and/or MOU. Corrective action is required prior to the next audit.
    or
    Audit determined that for a past Needs Improvement finding, the 
rate of corrective action has not proceeded in a timely manner; is not 
on the path to timely resolution of the finding.

Summary of Findings--July 2010

Compliant
    Caltrans was found to be compliant in meeting the requirements of 
the MOU for the key Pilot Program areas within the scope and the 
limitations of the audit, with the exceptions noted in the Deficient 
and Needs Improvement findings in this audit report set forth below. 
Caltrans continues to provide FHWA with all required oversight reports, 
per MOU Section 8.2 (e.g., Quarterly Reports listing project approvals 
and decisions made under the authority of the Pilot Program and the 
Self-assessment Summary Reports) and has fully cooperated with FHWA 
during the audit process. Even with the loss of staff, furloughs, and 
budget constraints Caltrans continues to be compliant in their 
commitment of resources needed to carry out the responsibilities 
assumed under the Pilot Program.
Needs Improvement
    (N1) Maintenance of Project and General Administrative Files--MOU 
Section 8.2.4 requires that Caltrans maintains project and general 
administrative files pertaining to its discharge of the 
responsibilities assumed under the Pilot Program. Caltrans has 
instituted specific procedures for maintaining project files in 
accordance with the UFS and has provided training on these procedures. 
Inconsistencies in the application of these procedures, which have been 
reported in previous audit findings,

[[Page 75537]]

were also identified throughout the Districts visited in this audit. 
Examples of inconsistencies observed in 10 of the approximately 80 
project files reviewed during the audit included:
    (a) Instances where required documentation was missing in project 
files but was produced by Caltrans staff at the request of the 
auditors. Examples of such missing documents included a letter 
documenting the State Historic Preservation Officer's concurrence on 
effect determination; correspondence between Caltrans and FWS regarding 
a Biological Opinion for a project; and project level conformity 
determinations by FHWA; and
    (b) Missing, out of order, or incomplete UFS tabs.
    (N2) Performance Measure--``Monitor relationships with agencies and 
the general public''--MOU Section 10.2.1.C requires Caltrans to 
``assess change in communication among Caltrans, Federal and State 
resource agencies, and the public.'' Caltrans conducted the first 
annual resource agency survey in 2009 and a second survey in February 
2010. The Second Annual Resource Agency Survey Report was delivered in 
May 2010. Each report lists an average rating for each survey question 
and a comparison is made from the previous report average ratings. The 
Survey Report does not report each agency's rankings separately, which 
would produce a more accurate assessment of Caltrans' individual 
relationship with Federal and State agencies. It is FHWA's 
recommendation that the specific agencies' rating information be shared 
with FHWA so that agency specific relationship issues could be 
identified and corrective actions could be discussed.
    (N3) Coordination with Resource Agencies--Through interviews with 
resource agency staff, the audit team learned the following:
    (a) Under MOU Section 7.1.1, Caltrans ``agrees to seek early and 
appropriate coordination with all appropriate Federal, State, and local 
agencies in carrying out any of the responsibilities and highway 
projects assumed under Part 3 of this MOU.'' Based on information 
obtained during audit interviews with representatives from a USACE 
District office, the audit team learned that Caltrans is not conducting 
pre-application coordination with this office nor engaging in 
appropriate coordination on NEPA reviews which is limiting the 
agencies' flexibility to develop project alternatives and mitigation 
options.
    (b) MOU Section 7.1.2, Caltrans ``agrees to make all reasonable and 
good faith efforts to identify and resolve conflicts with all 
appropriate Federal, State, and local agencies during the consultation 
and review process in carrying out any of the responsibilities assumed 
under Part 3 of this MOU.'' Interviews with representatives from a 
Caltrans District Office, a USACE District Office, and a FWS Field 
Office, determined that longstanding conflicts (i.e. insufficient 
information provided, lack of compliance with environmental commitments 
and disagreements on regulatory timeframes, action areas and 
compensative mitigation requirements) are not being addressed and 
``good faith'' efforts to resolve conflicts between these Federal 
agencies and a few Districts are lacking. These agencies reported that 
due to these conflicts, efforts to carry out responsibilities under 
applicable Federal laws are not being implemented to the fullest 
extent.
    (N4) Procedural and Substantive Requirements--MOU Section 5.1.4 
states that Caltrans will work with all other appropriate Federal 
agencies concerning the laws, guidance, and policies that such other 
Federal agencies are responsible for administering. Project file 
reviews and staff interviews identified the following inconsistencies:
    (a) The Section 7 consultation was incomplete and the Section 7 
finding was not included in the NEPA documentation of a project's 
Finding of No Significant Impacts (FONSI); and
    (b) An Environmental Assessment (EA) document did not identify that 
the project was in a 100-year flood zone and therefore, a 
``practicability'' finding was not made in the FONSI. As a result, the 
project was not in compliance with Executive Order 11988 Floodplain 
Management and 23 CFR 650.
    (N5) Compliance with Procedural and Substantive Requirements--MOU 
Section 5.1 requires Caltrans to be subject to the same procedural and 
substantive requirements that apply to the U.S. Department of 
Transportation (DOT) in carrying out the responsibilities assumed under 
the Pilot Program. Such procedural and substantive requirements include 
compliance with Federal laws, Federal regulations, Executive Orders, 
DOT Orders, FHWA Orders, official guidance and policy issued by DOT or 
FHWA, and any applicable Federal Court decisions, and interagency 
agreements such as programmatic agreements, memoranda of agreement, and 
other similar documents that relate to the environmental review 
process. Documentation errors during the NEPA process were noted in 11 
of approximately 80 project files reviewed during the audit. Project 
file reviews identified incomplete or inaccurate NEPA documents and 
other related project materials. Some of these instances included:
    (a) A FONSI that did not include a response to comments received on 
the EA regarding traffic operations and their impacts on the project;
    (b) A FONSI that did not include a statement that the Section 7 
consultation had been performed in compliance with the ESA;
    (c) Two CE determinations failed to reference the most current 
noise studies performed prior to the approvals of the CEs;
    (d) One CE determination failed to reference the most current 
traffic analysis performed prior to the approval of the CE and;
    (e) A project file contained a fact sheet for the project that 
contained incorrect information on the level of environmental 
documentation. Even if this fact sheet was not released to the public, 
it is part of the project file and would become part of the 
administrative record, and thus contain incorrect information.
    (N6) Re-evaluation Process--MOU Section 5.1 requires Caltrans to be 
subject to the same procedural and substantive requirements that apply 
to DOT in carrying out the responsibilities assumed under the Pilot 
Program. This includes the process and documentation for conducting 
NEPA re-evaluations to comply with 23 CFR 771.129. Additionally, SER 
Chapter 33 discusses re-validations and re-evaluations. Project file 
reviews and staff interviews identified varying degrees of compliance 
with these procedures. Project file reviews completed in some Districts 
determined that the re-evaluations completed complied with SER Chapter 
33. However, in other Districts project files identified the following 
inconsistencies:
    (a) A re-evaluation was used to combine portions of two EISs. The 
FHWA re-evaluation process does not accommodate such an approach. Other 
elements of this re-evaluation that appeared to deviate from 
established procedures included: (1) A change was made to the project 
that was not evaluated in either of the original EISs or the subsequent 
re-evaluations performed on the respective projects and (2) a previous 
conformity determination was relied on for the segment covered by one 
of the EISs, whereas a new conformity determination was done on the 
segment from the second EIS. There was no conformity determination for 
the combined project;
    (b) In another project file review, no evidence was found that a 
Section 106

[[Page 75538]]

Area of Potential Effect (APE) was revised after a post-final 
environmental document change occurred that expanded the footprint of 
the proposed project outside of the original APE. No documents in the 
project file were identified to support that Caltrans had performed an 
evaluation to determine if the change had an effect on the validity of 
the original environmental document or the Section 106 determination of 
effects;
    (c) A re-evaluation of an original CE determination contained, as a 
part of the re-evaluation, the addition of another project CE 
determination. The District concurrently issued a Section 6005 CE for 
the ``combined'' project, without including a new project description. 
The project file contained the new CE with the re-evaluation attached. 
Documentation in the file indicated that the second project was not to 
be added to the original CE, since that would make the first project 
ineligible for a Federal funding category;
    (d) A re-evaluation did not include documentation of an affirmative 
determination that the NEPA document was still valid; and
    (e) Instances were observed by the audit team that re-evaluations 
were approved without the original project file or approved 
environmental document being in the District Office. In one instance, a 
re-evaluation was approved by a District without reviewing the project 
file or final environmental document. According to information provided 
to the audit team, the project file had been removed from the office 
and could not be located.
    The audit team feels that additional clarification and guidance 
needs to be provided by Caltrans to the environmental staff as to the 
purpose and use of the re-evaluation process. A re-evaluation is done 
to determine if the approved environmental document or the CE 
designation remains valid. In the re-evaluation process, the original 
decision and analysis needs to be reviewed for its validity. The 
process is not intended to be used to change the scope of projects.
    (N7) Section 4(f) and ``Locally Significant'' Historic Resources--
MOU Section 5.1.1 affirms that Caltrans is subject to the same 
procedural and substantive requirements that apply to the DOT in 
carrying out the responsibilities assumed under the Pilot Program. The 
SER Chapter 20, Section 4(f) and Related Requirements, sets forth 
procedures for documenting impacts to Section 4(f) properties in 
Caltrans-assigned environmental documents, while the Forms and 
Templates section of the SER contains annotated outlines for such 
documents. However, the SER does not address how Caltrans should 
determine whether a historic resource which is significant at the local 
level should be considered eligible for protection under Section 4(f). 
In the case of one project reviewed by the audit team, it was unclear 
from review of the project file and from interviews with Caltrans staff 
what process was used for making the determination and what internal 
and external coordination and consultation was required. It is the 
audit team's opinion that the SER should include a process to ensure 
consistency in the determination of the historic significance of local 
resources.
    (N8) Training: Inconsistent Level of Training for Staff--MOU 
Section 12.1.1 requires Caltrans to ensure that its staff is properly 
trained and that training will be provided ``in all appropriate areas 
with respect to the environmental responsibilities Caltrans has 
assumed.'' Section 4.2.2 of the MOU also requires that Caltrans 
maintain adequate staff capability to effectively carryout the 
responsibilities it has assumed.
    The audit team found an inconsistent application of the training 
plan for generalists in two Districts. Interviews with several SEPs in 
two Districts indicated that oversight or tracking of training for 
generalists is not uniform and identified the need for a more 
systematic approach. The interviews found that training attended by 
generalists is not consistently monitored by their SEPs, nor is the 
training plan consistency applied or tracked to ensure employees attend 
the proper training given to support the generalist's responsibilities. 
While the audit team did learn that a more systematic training plan for 
generalists (i.e., the generalist roadmap) had recently been developed, 
it remains an important issue to ensure that staff attends the training 
prescribed by the plan to ensure they have the proper skill set to 
effectively carry out responsibilities under the Pilot Program.
    (N9) Training: Inconsistent Understanding of Required Processes--
MOU Section 4.2.2 requires Caltrans to maintain adequate organizational 
and staff capacity to effectively carry out the responsibilities it has 
assumed under MOU Section 3. The following inconsistencies were noted 
during interviews with Caltrans staff:
    (a) Interviews with two SEPs and project file reviews indicated a 
lack of understanding of the Section 4(f) process and options available 
for implementation and documentation of the Section 4(f) process. A 
lack of understanding and knowledge was identified in the areas of the 
determination of de minimis impacts findings, the use of established 
Section 4(f) programmatic agreements, and the required documentation, 
evaluation, and explanation to be included in the environmental 
documents;
    (b) Interviews with one HQ Environmental Coordinator and one SEP 
reflected a lack of awareness of any policy or guidance for the use the 
Statute of Limitations notice and;
    (c) Interviews with SEPs in two Districts reflected a lack of 
awareness and knowledge of the ``Blanket'' CE for approval of design 
exceptions. While the use of this may be limited, a general 
understanding and awareness is expected by Caltrans staff. Several SEPs 
either did not know of the ``Blanket'' CE or were unaware of how and 
when to use it.
Deficient
    (D1) Reports Listing Approvals and Decisions (i.e., Quarterly 
Reports)--MOU Section 8.2.7 requires Caltrans to submit a report 
listing all Pilot Program approvals and decisions made with respect to 
responsibilities assumed under the MOU with FHWA (each quarter for the 
first 2 years; after the first 2 years no less than every 6 months). 
Caltrans has chosen to continue to provide quarterly reports to FHWA. 
Inaccurate project reporting continues to be an ongoing issue affecting 
the quarterly report process and has been identified in every previous 
FHWA audit report. Among the reporting errors identified in this audit 
were:
    (a) Omission of two EAs;
    (b) Omission of one FONSI;
    (c) Omission of a biological opinion;
    (d) Incorrect approval date for a CE determination;
    (e) Incorrect listing of a re-evaluation/revalidation for a Section 
6004 CE determination as Section 6005 CE determination; and
    (f) Incorrectly included a re-evaluation/revalidation of a project 
with no Federal funding or required approvals, and therefore not a part 
of the Pilot Program.
    The current Caltrans approach to developing the quarterly reports 
continues to be deficient. The accuracy of the reports on project 
approvals and decisions affects the FHWA oversight of the Pilot 
Program. The FHWA acknowledges that Caltrans is in the initial stages 
of statewide implementation of the File Maker Pro environmental 
database. It is anticipated that the implementation of this database 
system will improve the accuracy of information provided in the 
quarterly reports to FHWA.

[[Page 75539]]

    (D2) Section 4(f) Documentation--MOU Section 5.1.1 affirms that 
Caltrans is subject to the same procedural and substantive requirements 
that apply to DOT in carrying out the responsibilities assumed under 
the Pilot Program. The SER Chapter 20, Section 4(f) and Related 
Requirements, sets forth procedures for documenting impacts to Section 
4(f) properties in Caltrans-assigned environmental documents, while the 
Forms and Templates section of the SER contains annotated outlines for 
such documents, including appropriate language for addressing de 
minimis impacts (49 U.S.C. 303(d); 23 U.S.C. 139(b); 23 CFR 774.17). As 
was also noted in the fourth FHWA audit of the Pilot Program, project 
file reviews and interviews with staff during this audit identified 
inconsistencies in the documentation requirements for carrying out the 
Section 4(f) provisions. These included:
    (a) For a bridge replacement project located within a National 
Forest, no documentation was provided in the EA document or in the 
project file regarding the Section 4(f) status of the recreational 
facilities in the immediate project vicinity or any possible project 
impacts to those resources;
    (b) A project file contained a letter from the official with 
jurisdiction over the Section 4(f) recreational resource stating the 
impacts to the resource would be de minimis. Neither the EA document 
nor the project file contained the supporting documentation for that 
determination, as required under 23 CFR 774.7(b).
    (c) The Section 4(f) discussion in the environmental document of 
another project (for which no NEPA approval had been made at the time 
of the audit) was unclear as to which type of Section 4(f) 
documentation and approval was being contemplated. The applicable 
section of the EA included the discussion of four different types of 
Section 4(f) approvals:
    1. The EA described the project as qualifying for a Nationwide 
Programmatic Section 4(f) evaluation, but did not reach a conclusion 
pursuant to the applicable Programmatic.
    2. The document then included a discussion similar to what is used 
in an individual Section 4(f) Evaluation, including impacts to Section 
4(f) properties, avoidance alternatives, and measures to minimize harm, 
ending by stating that no preferred alternative had been identified for 
the project.
    3. The EA also contained a Section 4(f) constructive use 
discussion, which reached no conclusion.
    4. Finally, the project file contained an e-mail stating that 
although the EA was missing expected language regarding de minimis 
impacts and a concurrence letter from the officials with jurisdiction, 
the Caltrans Branch Chief would sign the QA/QC sheets ``with the 
assurance that the above items will be completed.''
    (D3) QA/QC Certification Process--MOU Section 8.2.5 and SER Chapter 
38 require Caltrans staff to review each environmental document in 
accordance with the policy memorandum titled, ``Environmental Document 
Quality Control Program under the NEPA Pilot Program'' (July 2, 2007). 
Incomplete and incorrectly completed QC certification forms continue to 
be identified. During project file reviews by the audit team, the 
following instances of incomplete or incorrect QC certification forms 
since the July 2009 audit were observed:
    (a) An Environmental Assessment and Section 4(f) Evaluation was 
approved contingent on changes that still needed to be made to the 
document;
    (b) One QC certification form was approved by the Quality Control 
Reviewer, Preparer, and Branch Chief without the technical reviewer's 
signature due to pending comments;
    (c) Five other QC certification forms contained undated review 
signatures or the signatures were not obtained in the proper sequence 
in accordance with the Caltrans established QA/QC processes;
    (d) Two QC certification forms were missing the signatures of 
required reviewers. In those cases, a memo was included in the files 
documenting this oversight. One memo noted that the NEPA document that 
was approved for the project had been incomplete. No additional 
explanation was provided; and
    (e) Two external QC certification forms contained signatures that 
were obtained after the internal QC certification form signatures. The 
SER Chapter 38 process requires the QC external certification form to 
be completed before the internal certification review can be initiated.
    (D4) Maintenance of Project and General Administrative Files--MOU 
Section 8.2.4 requires Caltrans to maintain project and general 
administrative files pertaining to its discharge of the 
responsibilities assumed under the Pilot Program. Caltrans has 
instituted specific procedures for maintaining project files and has 
provided training on these procedures. Previous audits identified 
inconsistencies with the application of these procedures (i.e., missing 
required documents, missing UFS tabs) and inconsistencies throughout 
the Districts visited in this audit were also identified. This audit 
also identified inconsistencies with file maintenance in at least 15 of 
the approximately 80 project files reviewed. Examples of these include:
    (a) Various types of required project documentation were missing 
from project files. Examples of missing documents included:
     Signed final environmental documents;
     Noise abatement decision report;
     Historic Properties Survey Report;
     Environmental Commitment Records;
     Internal and external QC certification forms (some signed 
but undated);
     Signed copies of the PEAR/PES forms;
     Section 106 Memorandum of Agreement; and
     Information on the types of Section 4(f) resources and the 
projects' impacts upon them.
    (b) Two instances in which the project files were not available for 
review; in one case, the file has been improperly disposed, while in 
the other case, it was uncertain whether the project file had been 
misplaced or had never been set up.

[FR Doc. 2010-30326 Filed 12-2-10; 8:45 am]
BILLING CODE 4910-22-P