Surface Transportation Project Delivery Program; Arizona Department of Transportation FHWA Audit Report, 62878-62882 [2023-19704]

Agencies

• Federal Highway Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 88, Number 176 (Wednesday, September 13, 2023)]
[Notices]
[Pages 62878-62882]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-19704]


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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 FHWA Audit Report

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

ACTION: Notice.

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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

[[Page 62879]]

notice makes available the final second audit report for ADOT.

FOR FURTHER INFORMATION CONTACT: Ms. Colleen Vaughn, Office of Project 
Development and Environmental Review, (202) 633-0356, 
[email protected], Federal Highway Administration, U.S. Department 
of Transportation, 1200 New Jersey Avenue SE, Washington, DC 20590, or 
Ms. Michelle Andotra, Office of the Chief Counsel, (404) 562-3679, 
[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 
United States Code (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. The FHWA published a notice in the 
Federal Register at 87 FR 66357 on November 03, 2022, soliciting 
comments for 30 days pursuant to 23 U.S.C. 327(g). The FHWA received 
comments on the draft report from the American Road & Transportation 
Builders Association (ARTBA). The ARTBA's comments were supportive of 
the Surface Transportation Project Delivery Program and did not relate 
specifically to the audit. This notice makes available the final report 
of ADOT's second audit under the program. The final audit report is 
available for download at www.regulations.gov under FHWA-2021-0020.
    Authority: Section 1313 of Public Law 112-141; Section 6005 of 
Public Law 109-59; 23 U.S.C. 327; 23 CFR 773.

Shailen P. Bhatt,
Administrator, Federal Highway Administration.

Surface Transportation Project Delivery Program, FHWA Audit #2 of the 
Arizona Department of Transportation

Executive Summary

    This report summarizes the results of the Federal Highway 
Administration's second audit 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 
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 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

[[Page 62880]]

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 to 
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. The 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. The 
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. 
The FHWA will consider actions taken by ADOT to address these 
observations as part of the scope of the third audit.

Program Management

Successful Practice #1

    The 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. The 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. The 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 
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

    The ADOT continues to implement its standard folder structure 
for consistent

[[Page 62881]]

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

Successful Practice #6

    The 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. The 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. The 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. The 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

    The 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 were 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

    The 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. The 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 environmental studies and that 
ADOT intended to incorporate these early acquisitions into the 
right-of-way needed for the current project. The 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. The 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

    The 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). The 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. The 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. In addition, 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 (AAG) 
assigned to ADOT's NEPA Assignment Program, the auditors

[[Page 62882]]

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. The 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.

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. The ADOT has 
stated it intends to continue to utilize this method for sharing 
files with FHWA. The ADOT also indicated it will continue to 
identify improvements in technology to increase efficiencies in file 
sharing. The 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. The 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. The 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

    The 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. The 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. The 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. The 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.

Response to Public Comments on the Draft Report and the Final Report

    The FHWA received one comment applicable to the draft audit 
report, pursuant to 23 U.S.C. 327(g)(2). The American Road & 
Transportation Builders Association (ARTBA) commented that they are 
in general support of ADOT's implementation of the NEPA Assignment 
Program to accelerate Federal-aid highway program and project 
delivery in Arizona. The FHWA appreciates ARTBA's input.
    After reviewing the public comments, FHWA determined that there 
is no need to revise the draft audit report. Therefore, FHWA is 
finalizing ADOT's second NEPA Assignment audit report with this 
Federal Register notice.

[FR Doc. 2023-19704 Filed 9-12-23; 8:45 am]
BILLING CODE 4910-22-P