Surface Transportation Project Delivery Program; Arizona Department of Transportation Draft FHWA Audit Report, 66357-66362 [2022-23915]

Agencies

• Federal Highway Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 87, Number 212 (Thursday, November 3, 2022)]
[Notices]
[Pages 66357-66362]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-23915]


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DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

[FHWA Docket No. FHWA-2021-0020]


Surface Transportation Project Delivery Program; Arizona 
Department of Transportation Draft FHWA Audit Report

AGENCY: Federal Highway Administration (FHWA), Department of 
Transportation (DOT).

ACTION: Notice; request for comment.

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SUMMARY: The Moving Ahead for Progress in the 21st Century Act 
established the Surface Transportation Project Delivery Program that 
allows a State to assume FHWA's environmental responsibilities for 
environmental review, consultation, and compliance under the National 
Environmental Policy Act (NEPA) for Federal highway projects. When a 
State assumes these Federal responsibilities, the State becomes solely 
responsible and liable for carrying out the responsibilities it has 
assumed, in lieu of FHWA. This program mandates annual audits during 
each of the first 4 years of State participation to ensure compliance 
with program requirements. This is the second audit of the Arizona 
Department of Transportation's (ADOT) performance of its 
responsibilities under the Surface Transportation Project Delivery 
Program (NEPA Assignment Program). This notice announces and solicits 
comments on the second audit report for ADOT.

DATES: Comments must be received on or before December 5, 2022.

[[Page 66358]]


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 www.regulations.gov. 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 can 
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). The DOT posts these comments, without edits, including any 
personal information the commenter provides, to www.regulations.gov, as 
described in the system of records notice (DOT/ALL-14 FDMS), which can 
be reviewed at www.dot.gov/privacy.

FOR FURTHER INFORMATION CONTACT: Mr. Neel Vanikar, Office of Project 
Development and Environmental Review, (202) 366-2068, 
[email protected], Federal Highway Administration, U.S. Department 
of Transportation, 1200 New Jersey Avenue SE, Washington, DC 20590, or 
Mr. Patrick Smith, Office of the Chief Counsel, (202) 366-1345, 
[email protected], Federal Highway Administration, U.S. 
Department of Transportation, 1200 New Jersey Avenue SE, Washington, DC 
20590. Office hours are from 8:00 a.m. to 4:30 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 
specific docket page at www.regulations.gov.

Background

    The Surface Transportation Project Delivery Program, codified at 23 
U.S.C. 327, commonly known as the NEPA Assignment Program, allows a 
State to assume FHWA's environmental responsibilities for review, 
consultation, and compliance for Federal highway projects. When a State 
assumes these Federal responsibilities, the State becomes solely liable 
for carrying out the responsibilities it has assumed, in lieu of FHWA. 
The ADOT published its application for NEPA assumption on June 29, 
2018, and solicited public comment. After considering public comments, 
ADOT submitted its application to FHWA on November 16, 2018. The 
application served as the basis for developing a memorandum of 
understanding (MOU) that identifies the responsibilities and 
obligations that ADOT would assume. The FHWA published a notice of the 
draft MOU in the Federal Register on February 11, 2019, at 84 FR 3275, 
with a 30-day comment period to solicit the views of the public and 
Federal agencies. After the close of the comment period, FHWA and ADOT 
considered comments and proceeded to execute the MOU. Effective April 
16, 2019, ADOT assumed FHWA's responsibilities under NEPA, and the 
responsibilities for NEPA-related Federal environmental laws described 
in the MOU.
    Section 327(g) of Title 23, U.S.C., requires the Secretary to 
conduct annual audits to ensure compliance with the MOU during each of 
the first 4 years of State participation and, after the fourth year, 
monitor compliance. The FHWA must make the results of each audit 
available for public comment. This notice announces and solicits 
comments on the second audit report for ADOT.
    Authority: Section 1313 of Public Law 112-141; Section 6005 of 
Public Law 109-59; 23 U.S.C. 327; 23 CFR 773.

Stephanie Pollack,
Deputy Administrator, Federal Highway Administration.

Surface Transportation Project Delivery Program

Draft FHWA Audit #2 of the Arizona Department of Transportation

Executive Summary

    This is Audit #2 of the Arizona Department of Transportation's 
(ADOT) assumption of National Environmental Policy Act (NEPA) 
responsibilities under the Surface Transportation Project Delivery 
Program. Under the authority of Title 23 United States Code (U.S.C.) 
Section 327, ADOT and the Federal Highway Administration (FHWA) 
executed a memorandum of understanding (MOU) on April 16, 2019, to 
memorialize ADOT's NEPA responsibilities and liabilities for Federal-
aid highway projects and other related environmental reviews for 
highway projects in Arizona. This 23 U.S.C. 327 MOU covers 
environmental review responsibilities for projects that require the 
preparation of environmental assessments (EA), environmental impact 
statements (EIS), and non-designated individual categorical exclusions 
(CE). A separate MOU between FHWA and ADOT, pursuant to 23 U.S.C. 326, 
authorizes environmental review responsibilities for other CEs. This 
audit does not cover the CE responsibilities and projects assigned to 
ADOT under the 23 U.S.C. 326 MOU.
    The FHWA conducted an audit of ADOT's performance according to the 
terms of the MOU from March 29 to April 1, 2021. Prior to the audit, 
the FHWA audit team reviewed ADOT's environmental manuals and 
procedures, NEPA project files, ADOT's response to FHWA's pre-audit 
information request (PAIR), and ADOT's NEPA Assignment Self-Assessment 
Report. During the March 2021 audit, the audit team conducted 
interviews with staff from ADOT Environmental Planning (EP) and the 
Arizona Attorney General's Office (AGO) and prepared preliminary audit 
results. The audit team presented these preliminary results to ADOT EP 
leadership on April 1, 2021. The audit team conducted a completely 
virtual site visit rather than its traditional onsite visit due to 
national health emergency travel restrictions.
    Overall, the audit team found that ADOT has carried out the 
responsibilities it has assumed consistent with the intent of the MOU 
and ADOT's application. The ADOT continues to develop, revise, and 
implement procedures and processes required to deliver its NEPA 
Assignment Program. This report describes several observations and 
successful practices. Through this report, FHWA is notifying ADOT of 
two non-compliance observations that require ADOT to take corrective 
action. By addressing the observations in this report, ADOT will 
continue to assure successful program assignment.

Background

    The purpose of the audits performed under the authority of 23 
U.S.C. 327 is to assess a State's compliance with the provisions of the 
MOU as well as all applicable Federal statutes, regulations, policies, 
and guidance. The FHWA's review and oversight obligation entails the 
need to collect information to evaluate the success of the NEPA 
Assignment Program; to evaluate a State's progress toward achieving its 
performance measures as specified in the MOU; and to collect 
information for the administration of the NEPA Assignment Program. This 
report summarizes the results of the second audit in Arizona and ADOT's 
progress towards meeting the program review

[[Page 66359]]

objectives identified in the MOU. Following this audit, FHWA will 
conduct two additional annual NEPA Assignment Program audits in 
Arizona.

Scope and Methodology

    The overall scope of this audit review is defined both in statute 
(23 U.S.C. 327) and the MOU (Part 11). The definition of an audit is 
one where an independent, unbiased body makes an official and careful 
examination and verification of accounts and records, especially of 
financial accounts. Auditors who have special training with regard to 
accounts or financial records may follow a prescribed process or 
methodology in conducting an audit of those processes or methods. The 
FHWA considers its review to meet the definition of an audit because it 
is an unbiased, independent, official, and careful examination and 
verification of records and information about ADOT's assumption of 
environmental responsibilities.
    The audit team consisted of NEPA subject matter experts (SME) from 
FHWA Headquarters, Resource Center, Office of the Chief Counsel, and 
staff from FHWA's Arizona Division. This audit is an unbiased official 
action taken by FHWA, which included an audit team of diverse 
composition, and followed an established process for developing the 
review report and publishing it in the Federal Register.
    The audit team reviewed six NEPA Assignment Program elements: 
program management; documentation and records management; quality 
assurance/quality control (QA/QC); performance measures; legal 
sufficiency; and training. The audit team considered two additional 
focus areas for this review: the procedures contained in 40 CFR part 93 
for project-level conformity and the procedures contained in Section 
4(f) of the U.S. Department of Transportation Act of 1966, codified in 
49 U.S.C. 303 and 23 U.S.C. 138 (otherwise known as Section 4(f)). This 
report concludes with a status update for FHWA's observations from the 
first audit report.
    The audit team conducted a careful examination of ADOT policies, 
guidance, and manuals pertaining to NEPA responsibilities, as well as a 
representative sample of ADOT's project files. Other documents, such as 
ADOT's PAIR responses and ADOT's Self-Assessment Report, also informed 
this review. In addition, the audit team interviewed ADOT staff via 
videoconference.
    The timeframe defined for this second audit includes highway 
project environmental approvals completed between January 1, 2020, and 
December 31, 2020. During this timeframe, ADOT completed NEPA approvals 
and documented NEPA decision points for nine projects. Due to the small 
sample size, the audit team reviewed all nine projects. This consisted 
of three EAs with a Finding of No Significant Impact, two EAs initiated 
with scoping completed, three EA re-evaluations, and one individual CE.
    The PAIR submitted to ADOT contained 24 questions covering all 6 
NEPA Assignment Program elements. The audit team developed specific 
follow-up questions for the interviews with ADOT staff based on ADOT 
responses to the PAIR. The audit team conducted a total of 13 
interviews. Interview participants included staff from ADOT EP and the 
Arizona AGO.
    The audit team compared ADOT manuals and procedures to the 
information obtained during interviews and project file reviews to 
determine if ADOT's performance of its MOU responsibilities is in 
accordance with ADOT procedures and Federal requirements. The audit 
team documented individual observations and successful practices during 
the interviews and reviews and combined these under the six NEPA 
Assignment Program elements. The audit results are described below by 
program element.

Overall Audit Opinion

    The audit team found ADOT has carried out the responsibilities it 
has assumed consistent with the intent of the MOU and ADOT's 
application. FHWA is notifying ADOT of two non-compliance observations 
that require ADOT to take corrective action. By addressing the 
observations cited in this report, ADOT will continue to ensure a 
successful program.

Successful Practices and Observations

    Successful practices are practices that the team believes are 
positive and encourages ADOT to consider continuing or expanding those 
programs in the future. The audit team identified numerous successful 
practices in this report.
    Observations are items the audit team would like to draw ADOT's 
attention to, which may improve processes, procedures, and/or outcomes. 
The team identified four observations in this report.
    Non-compliance observations are instances where the audit team 
finds the State is not in compliance or is deficient with regard to a 
Federal regulation, statute, guidance, policy, State procedure, or the 
MOU. Non-compliance may also include instances where the State has 
failed to secure or maintain adequate personnel and/or financial 
resources to carry out the responsibilities they have assumed. FHWA 
expects the State to develop and implement corrective actions to 
address all non-compliance observations. The audit team identified two 
non-compliance observations in this report.
    The audit team shared initial results during the closeout meeting 
with ADOT and shared the draft audit report with ADOT to provide them 
the opportunity to clarify any observation, as needed, and/or begin 
implementing corrective actions to improve the program. FHWA will 
consider actions taken by ADOT to address these observations as part of 
the scope of the third audit.

Successful Practices and Observations

Program Management

Successful Practice #1

    ADOT EP continues to maintain several guidance manuals for 
implementing NEPA Assignment and evaluating environmental resources. 
These manuals are readily available online at ADOT's environmental 
website. ADOT continuously updates its manuals and ensures staff are 
informed of updates. Staff noted the benefit of utilizing the guidance 
manuals and having better defined procedures.

Successful Practice #2

    During interviews with staff, the audit team learned that ADOT EP 
has increased internal communication and coordination by holding 
monthly meetings with the NEPA Assignment Program managers and 
technical area program managers, and by holding biweekly meetings with 
program managers. ADOT EP's internal communication efforts also 
included emails and informal staff interactions.

Successful Practice #3

    During interviews with staff, the audit team learned that staff 
felt a benefit of NEPA Assignment has been an increased sense of 
ownership and responsibility for the program and decisions. Program 
managers indicated that staff at all levels within ADOT had become more 
engaged in the NEPA Assignment Program.

Observations

Observation #1: Deficiencies and Gaps in ADOT's Manuals and Procedures
    The audit team reviewed ADOT's manuals and procedures as part of 
the evaluation of ADOT's performance of its MOU responsibilities. 
Section 4.2.4 of the MOU specifies that ADOT must implement procedures 
to support appropriate environmental analysis and

[[Page 66360]]

decisionmaking under NEPA and associated laws and regulations. The 
audit team identified the following deficiencies in ADOT's manuals and 
procedures which may result in incomplete project documentation or 
analysis and increase the risk for non-compliance:
     The ADOT CE Checklist Manual and the ADOT EA/EIS Manual 
contain different procedures for completing re-evaluations and the 
process for re-evaluations for EA/EISs is not well-defined. During 
interviews, staff described variations in the procedures for completing 
and documenting re-evaluations.
     The ADOT Section 4(f) Manual, documentation forms, and 
desk reference/matrix contain information inconsistent with FHWA 
guidance and regulation, as identified below:
    [cir] The manual, desk reference/matrix, ``Section 4(f) 
Applicability/Exceptions'' form, and ``No Section 4(f) Property/Use'' 
form incorrectly state that the exception for archaeological sites 
applies only to Section 106 adverse effect findings. The archaeological 
exception can be applied to both no adverse effect and adverse effect 
findings. Moreover, resources resulting in either finding must still be 
evaluated for Section 4(f) applicability and potential uses. The 
incorrect information in ADOT's materials creates the risk of 
inadequately evaluating archaeological sites with a finding of no 
adverse effect for Section 4(f) purposes, and not consulting with the 
official with jurisdiction when the archaeological exception is 
applied.
    [cir] The manual, desk reference/matrix, and ``No Section 4(f) 
Property/Use'' form incorrectly state that a Section 106 no adverse 
effect finding equates to a Section 4(f) ``no use.'' While it is 
possible for a Section 4(f) ``no use'' to apply in cases of no adverse 
effect findings, this is not automatic, and resources should be 
evaluated on an individual basis to determine potential uses. The 
project file should include information demonstrating that a ``no use'' 
determination is appropriate and the factors that support that 
decision. The incorrect information in ADOT's materials creates the 
risk of inadequately evaluating all eligible historic properties for 
potential uses.
    [cir] The ``Section 4(f) De Minimis Impact on Public Parks, 
Recreational Areas and Wildlife/Waterfowl Refuges'' form incorrectly 
indicates that meeting minutes alone can be used to document written 
concurrence from the official with jurisdiction. Meeting minutes can be 
used to demonstrate that communicating potential impacts and 
coordinating with the official with jurisdiction occurred, but written 
concurrence should be documented through formal correspondence (e.g., 
signed letter or form, or email responses).

Documentation and Records Management

Successful Practice #4

    During interviews, staff indicated increased efforts to coordinate 
with the ADOT Communications Office and the ADOT Civil Rights Office on 
public involvement activities conducted for projects.

Successful Practice #5

    ADOT continues to implement its standard folder structure for 
consistent record keeping and assistance with QA reviews. Staff 
commented that the standard folder structure was a helpful tool and 
improved process for maintaining project files.

Successful Practice #6

    ADOT EP has developed standard templates (checklists, forms) for 
various decision-points and processes. Staff noted that using the 
standard templates during the environmental review process has 
increased the consistency of project documentation.

Observations

    Section 4.2.4 of the MOU specifies that ADOT must implement 
procedures to support appropriate environmental analysis and 
decisionmaking under NEPA and associated laws and regulations. The 
audit team identified several inconsistencies between ADOT's procedures 
for documenting project decisions (as identified in the ADOT CE 
Checklist Manual, ADOT EA/EIS Manual, ADOT Section 4(f) Manual, ADOT 
QA/QC Plan, and ADOT Project Development Procedures Manual) and the 
project file documentation provided. ADOT was provided an opportunity 
during the audit, and during their opportunity to comment on the draft 
audit report, to clarify inconsistencies identified by the audit team 
and provide additional information regarding the project documentation. 
ADOT provided explanations to the audit team's questions and indicated 
where specific information was located in the project files but did not 
submit additional documents or files. FHWA did not consider this 
supplemental information to be sufficient for four audited projects.
Non-Compliance Observation #1: Deficiencies in Section 4(f) Evaluation 
of Archaeological Resources
    ADOT's Section 4(f) Manual (Sections 3.3 and 3.4.2) and FHWA 
regulations, policies, and guidance provide information on determining 
the applicability of Section 4(f) to archaeological resources and 
determining if there is an exception or potential use. ADOT's Section 
4(f) Manual (Sections 5.2 and 5.3) specifies procedures for documenting 
Section 4(f) uses of archaeological sites, exceptions per 23 CFR 
774.13(b), and ``no use'' determinations. During Audit #1, FHWA 
identified inconsistencies with ADOT's Section 4(f) evaluation and 
documentation of archaeological sites which were included as an 
observation in the Audit #1 Report. The audit team observed similar 
inconsistencies during the project file reviews for this audit and 
identified the following procedural deficiencies relating to ADOT's 
Section 4(f) evaluation and documentation:
     One project file included a Section 106 adverse effect 
determination for two archaeological sites, indicating the presence of 
Section 4(f) resources and potential Section 4(f) uses. The 
consultation letter sent to the Arizona State Historic Preservation 
Officer did not state ADOT's intent to apply the archaeological 
exception to these sites or include other Section 4(f) information 
regarding these sites. No other consultation letters or other 
information was provided in the project file or NEPA document as to how 
these two sites were evaluated for Section 4(f).
Non-Compliance Observation #2: Deficiencies in Analysis of Right-of-Way 
Impacts
    ADOT's procedures (ADOT EA/EIS Manual) and FHWA's regulations, 
policies, and guidance provide information on how to consider right-of-
way impacts in the NEPA analysis. FHWA's regulations, policies, and 
guidance provide additional information on how early property 
acquisitions should be considered with the right-of-way impacts 
analysis. After completing the project file review, the audit team 
identified the following procedural deficiencies relating to ADOT's 
evaluation of right-of-way impacts:
     One project file did not demonstrate that early 
acquisition of properties and previous relocations were adequately 
addressed in the impact analysis in the NEPA document. The NEPA 
document stated that ADOT had acquired properties within the project 
corridor during previous planning and

[[Page 66361]]

environmental studies and that ADOT intended to incorporate these early 
acquisitions into the right-of-way needed for the current project. CEs 
previously completed for some of these early acquisitions included a 
complete NEPA evaluation. However, several CEs previously completed for 
early acquisitions were only for title transfer of the properties (per 
23 CFR 771.117(d)(12)) and did not evaluate demolition, relocations, or 
other potential environmental impacts. The audit team requested 
additional information from ADOT regarding the NEPA analysis of these 
properties. ADOT responded that the project files and NEPA document 
contained a complete record and no additional documentation was 
available. Since the properties acquired as early acquisitions were 
incorporated into the right-of-way needed for the current project, 
these properties should have been included in the NEPA analysis, even 
though the properties were acquired during other planning and 
environmental studies. Based on the information provided in the project 
file and the NEPA document, it does not appear that all of the early 
acquisitions were fully evaluated in the NEPA analysis for the current 
project, nor were they accounted for in the total number of 
acquisitions required for the project (per 23 CFR 771.119(b)). The land 
use, environmental justice, community impacts, and indirect and 
cumulative impacts sections provided conflicting information regarding 
the impact analyses of these properties. Therefore, it is unclear how 
all the early property acquisitions were considered in the overall 
right-of-way impacts analysis in the NEPA evaluation.
Observation #2: Deficiencies in Section 4(f) Documentation of de 
Minimis Impact to Historic Properties
    ADOT's procedures (ADOT Section 4(f) Manual Sections 5.1 and 5.4.2 
and ADOT QA/QC Plan Section 5.1.1) specify completing the ``Section 
4(f) De Minimis Impact for Historic Properties Form'' in addition to 
obtaining written concurrence from the official with jurisdiction.
    After completing the project file review, the audit team found that 
two project files did not include the ``Section 4(f) De Minimis Impact 
for Historic Properties Form'' for de minimis impacts to historic 
properties.
Observation #3: Inconsistencies in Interagency Consultation 
Documentation
    After completing the project file review, the audit team found 
several inconsistencies with ADOT's documentation of compliance with 
interagency consultation requirements (per 40 CFR 93.105). It is 
unclear if interagency consultation occurred for some projects since 
the project files did not include information on agency responses, 
concurrence, and the comment resolution process. Therefore, it is 
unknown if the interagency consultation agencies had an opportunity to 
participate in consultation or if ADOT provided them an opportunity to 
review and comment on the materials as required by 40 CFR 93.105 and 
MOU Section 7.2.1.
    The audit team is aware that ADOT has increased efforts to follow 
up with agencies throughout interagency consultation and include email 
responses with consultation documentation and acknowledges ADOT's 
progress toward improving their processes.

Quality Assurance/Quality Control

    The audit team verified that ADOT has procedures in place for QA/QC 
which are described in the ADOT QA/QC Plan and the ADOT Project 
Development Procedures. No observations were identified during this 
audit.

Performance Measures

Observations

Observation #4: Incomplete Development and Implementation of 
Performance Measures To Evaluate the Quality of ADOT's Program
    The audit team reviewed ADOT's development and implementation of 
performance measures to evaluate their program as required in the MOU 
(Part 10.2.1). ADOT's QA/QC Plan, PAIR response, and self-assessment 
report identified several performance measures, but all included 
limited reporting data for the review period. ADOT's reporting data 
primarily dealt with increasing efficiencies and reducing project 
delivery schedules rather than on measuring the quality of 
relationships with agencies and the general public, and decisions made 
during the NEPA process. The metrics ADOT has developed are not being 
utilized to provide a meaningful or comprehensive evaluation of the 
overall program. Additionally, ADOT's performance measures indicate a 
disconnect between its metrics and availability of reportable data. 
Staff indicated during interviews that performance measures are not an 
effective or useful tool in evaluating the program.

Legal Sufficiency

    Through information provided by ADOT and interviews by the FHWA 
Office of Chief Counsel with two Assistant Attorneys General (AAGs) 
assigned to ADOT's NEPA Assignment Program, the auditors determined 
ADOT had not completed formal legal sufficiency reviews of assigned 
environmental documents during the audit period. Currently, ADOT 
retains the services of two AAGs for NEPA Assignment reviews and 
related matters. The assigned AAGs have received formal and informal 
training in environmental law matters.

Successful Practice #7

    Through the interviews, the audit team learned ADOT seeks to 
involve its lawyers early in the environmental review phase, with AAGs 
participating in project coordination team meetings and reviews of 
early drafts of environmental documents. The AAGs will provide legal 
guidance at any time ADOT requests it throughout the project 
development process. For formal legal sufficiency reviews, the process 
includes a submittal package containing a request for legal sufficiency 
review. A letter finding of legal sufficiency would be included in the 
project file.

Training

    The audit team reviewed ADOT's 2021 Training Plan and ADOT's PAIR 
responses pertaining to its training program. ADOT continues to 
maintain a strong training program by providing training opportunities 
to staff and dedicating time, effort, and resources toward its training 
program. To further support the training program, ADOT EP employs a 
dedicated training coordinator within the environmental section.

Successful Practice #8

    During staff interviews, the audit team learned that the staff 
provides input on the training plan and that program managers meet 
quarterly to discuss training needs. Staff remarked on the availability 
of training offered to them and considered this to be a benefit to 
ADOT's NEPA Assignment Program. The audit team commends ADOT for 
adjusting to a virtual environment and offering online training 
opportunities for staff.

Status of Observations From the Audit #1 Report

    This section describes the actions ADOT has taken (or is taking) in 
response to observations made during the first audit.

[[Page 66362]]

Non-Compliance Observation #1: Incomplete Project Files Submission
    During Audit #1, ADOT submitted incomplete project files to FHWA by 
not uploading all files requested by FHWA to the file sharing website. 
For Audit #2, ADOT provided FHWA direct access to the project files 
requested for the project file review. ADOT has stated it intends to 
continue to utilize this method for sharing files with FHWA. ADOT also 
indicated it will continue to identify improvements in technology to 
increase efficiencies in file sharing. FHWA appreciates ADOT's efforts 
towards increasing the transparency and communication during the audit 
process, and better utilizing available technologies.
Non-Compliance Observation #2: Project-Level Conformity Compliance 
Issues
    During Audit #1, the audit team found that ADOT's protocols do not 
provide for the appropriate consultation, coordination, and 
communication with FHWA and other agencies to ensure the projects meet 
the project-level conformity requirements where required. The audit 
team found documentation for two projects showing that ADOT staff did 
not coordinate with FHWA on the application of conformity requirements 
and found multiple projects that did not demonstrate ADOT's compliance 
with interagency consultation requirements (per 40 CFR 93.105). As part 
of Audit #2, the audit team learned that ADOT has made progress toward 
addressing these issues. ADOT and FHWA established a joint working 
group that resulted in developing draft coordination procedures and 
identifying increased communication methods, including monthly 
coordination meetings. During the file review for Audit #2, the audit 
team identified additional inconsistencies in the project files as 
described in the observations above. FHWA recognizes ADOT's efforts 
toward improving its procedures and will continue to evaluate this area 
in subsequent audits.
Observation #1: Use of the Federal Infrastructure Permitting Dashboard
    ADOT is responsible for inputting project information for assigned 
projects into the Federal Infrastructure Permitting Dashboard, per MOU 
Section 8.5.1 and in accordance with the Federal Permitting Dashboard 
Reporting Standard. During Audit #1, the audit team found that the 
dashboard did not include information for any of the applicable 
projects assigned to ADOT. ADOT has since obtained access to the 
dashboard, designated staff responsible for entering project data, and 
has updated the dashboard with relevant project information.
Observation #2: Inconsistencies and Deficiencies Based on the Review of 
Project File Documentation
    After completing the project file review for Audit #1, the audit 
team identified several procedural deficiencies relating to the MOU, 
ADOT's procedures, and FHWA's regulations, policies, and guidance. To 
address this issue, ADOT has developed standard templates (forms, 
checklists) to increase consistency in project file documentation and 
has informed staff of documentation requirements. The audit team 
identified additional procedural deficiencies during Audit #2 as 
identified in the observations described above. FHWA recognizes ADOT's 
efforts toward improving its procedures and will continue to evaluate 
this area in subsequent audits.
Observation #3: Incomplete Development and Implementation of 
Performance Measures
    During Audit #1, the audit team reviewed ADOT's development and 
implementation of performance measures to evaluate their program as 
required in the MOU (Part 10.2.1). The Self-Assessment Report did not 
include reporting data for any of the performance measures. Due to the 
lack of performance measure data, the audit team determined that ADOT 
had not fully established and initiated data collection as it relates 
to performance metrics per the MOU. For Audit #2, the audit team 
reviewed ADOT's performance measures and reporting data submitted for 
the review period. ADOT has made progress toward developing and 
implementing its performance measures, though FHWA continues to 
identify this program objective as an area of concern, described in the 
observations above, and will continue to evaluate this area in 
subsequent audits.

Finalizing This Report

    FHWA provided a draft of the audit report to ADOT for a 14-day 
review and comment period. ADOT provided comments which the audit team 
considered in finalizing this draft audit report. The audit team 
acknowledges that ADOT has begun to address some of the observations 
identified in this report and recognizes ADOT's efforts toward 
improving their program. FHWA is publishing this notice in the Federal 
Register for a 30-day comment period in accordance with 23 U.S.C. 
327(g). No later than 60 days after the close of the comment period, 
FHWA will address all comments submitted to finalize this draft audit 
report pursuant to 23 U.S.C. 327(g)(2)(B). Subsequently, FHWA will 
publish the final audit report in the Federal Register. FHWA will 
consider the results of this audit in preparing the scope of the next 
annual audit. The next audit report will include a summary that 
describes the status of ADOT's corrective and other actions taken in 
response to this audit's conclusions.

[FR Doc. 2022-23915 Filed 11-2-22; 8:45 am]
BILLING CODE 4910-22-P