Surface Transportation Project Delivery Program; Arizona Department of Transportation Final FHWA Audit Report, 54952-54957 [2024-14501]

Agencies

• Federal Highway Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 89, Number 127 (Tuesday, July 2, 2024)]
[Notices]
[Pages 54952-54957]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-14501]


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DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

[FHWA Docket No. FHWA-2023-0005]


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

AGENCY: Federal Highway Administration (FHWA), 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 
(referred to as National Environmental Policy Act (NEPA) Assignment 
Program), which allows a State to assume FHWA's environmental 
responsibilities for environmental review, consultation, and compliance 
under NEPA. 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 third audit 
of the Arizona Department of Transportation's (ADOT) performance of its 
responsibilities under the NEPA Assignment Program. This notice 
announces the final third audit report for ADOT.

FOR FURTHER INFORMATION CONTACT: Owen Lindauer, Ph.D., RPA, Office of 
Project Development and Environmental Review, (202) 633-2655, 
[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., EST, 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 
Title 23, United Sates Code (U.S.C.), section 327, commonly known as 
the NEPA Assignment Program, allows a State to assume FHWA's 
environmental responsibilities for review, consultation, and compliance 
for Federal-aid 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 other 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 88 FR 67424 on September 29, 2023, soliciting 
comments for 30 days pursuant to 23 U.S.C. 327(g). As a result of the 
notice one non-substantive comment was submitted. The FHWA removed what 
was Observation #4 because, on reflection, ADOT's Section 4(f) manual 
adequately explained the expected documentation. This notice makes 
available the final report of ADOT's third audit under the program. The 
final audit report is available for download at www.regulations.gov 
under FHWA-2023-0005.
    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 #3 of the 
Arizona Department of Transportation

Executive Summary

    This is Audit #3 of the Arizona Department of Transportation's 
(ADOT) assumption of

[[Page 54953]]

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 define ADOT's NEPA 
responsibilities and liabilities for Federal-aid highway projects 
and other related environmental reviews for highway projects in 
Arizona. This MOU covers environmental review responsibilities for 
projects that require the preparation of environmental assessments 
(EA), environmental impact statements (EIS), and unlisted 
(identified as individual by ADOT) categorical exclusions (CE).
    The FHWA conducted a third audit of ADOT's performance according 
to the terms of the MOU from March 28 to April 1, 2022. 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 third audit, the audit team conducted 
interviews with staff from ADOT's Environmental Planning (EP), Civil 
Rights Office, Communications, Construction Districts, Contracts & 
Specifications, as well as the Gila River Indian Community Tribal 
Historic Preservation Office (THPO), the Hopi THPO, the Salt River 
Pima-Maricopa Indian Community THPO, the Arizona State Historic 
Preservation Officer (SHPO), and the Arizona Attorney General's 
Office (AGO), and prepared preliminary audit results. The audit team 
presented these preliminary results to ADOT leadership on April 1, 
2022.
    The audit team found that ADOT has carried out the 
responsibilities it 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 general 
observations and successful practices, as well as identified non-
compliance observations where ADOT must implement corrective actions 
prior to the next audit. While ADOT has expressed lack of full 
agreement on some of the past audit observations, the audit team 
does recognize that ADOT continues to act on those past 
observations. By doing so, ADOT continues 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 
requires FHWA 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 third audit in 
Arizona and ADOT's progress towards meeting the program review 
objectives identified in the MOU.

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. 
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 four additional 
focus areas for this review: the procedures contained in 40 CFR part 
93 for project-level conformity; the procedures contained in Section 
4(f) of the U.S. Department of Transportation Act of 1966, codified 
at 49 U.S.C. 303 and 23 U.S.C. 138 (otherwise known as Section 
4(f)); environmental justice evaluations (Environmental Justice per 
Executive Order (E.O.) 12898, Federal Actions to Address 
Environmental Justice in Minority Populations and Low-Income 
Populations, and Tribal consultation per the National Historic 
Preservation Act (NHPA) of 1966, 36 CFR 800 et seq., E.O. 13175, 
Consultation with Indian Tribal governments); and additionally, 
ADOT's environmental commitment tracking process. This report 
concludes with a status update for FHWA's observations from the 
first and second audit reports.
    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, Arizona AGO, Tribal THPO staff, as well as the Arizona SHPO 
via videoconference.
    The timeframe defined for this third audit includes highway 
project environmental approvals completed between January 1 and 
December 31, 2021. During this timeframe, ADOT completed NEPA 
approvals and documented NEPA decision points for six projects. Due 
to the small sample size, the audit team reviewed all six projects. 
This consisted of one Tier 1 EIS, one EA with a Finding of No 
Significant Impact, and four unlisted CEs. The FHWA also reviewed 
information pertaining to project tracking and mitigation commitment 
compliance for all projects that have been processed by ADOT since 
the initiation of the NEPA Assignment Program.
    The PAIR submitted to ADOT contained 25 questions covering all 6 
NEPA Assignment Program elements. The audit team developed specific 
follow-up questions for the interviews with ADOT staff and others 
based on ADOT's responses to the PAIR. The audit team conducted a 
total of 23 interviews. Interview participants included staff from 
ADOT, Tribal THPOs, the Arizona AGO, as well as the Arizona SHPO.
    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 five non-compliance 
observations identified in this audit that require ADOT to take 
corrective action. The ADOT must address these non-compliance 
observations and continue making progress on non-compliance 
observations in the previous audits prior to the next audit. 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 the 
use of those practices in the future. The audit team identified 
successful practices in this report.
    Observations are items the audit team would like to draw ADOT's 
attention to, and for which ADOT may consider improving processes, 
procedures, and/or outcomes. The team identified nine general 
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 five non-compliance observations in this report.

Program Management

Successful Practice #1

    The ADOT's PAIR response indicated, and interviews confirmed, 
that ADOT EP is

[[Page 54954]]

working with the ADOT Civil Rights Office (CRO) to develop an 
environmental justice standard work process. This will establish the 
roles and responsibilities between the two ADOT offices and ensure 
the CRO's technical review of the environmental justice analysis is 
completed.

Observations

Non-Compliance Observation #1: Incomplete Reporting to the Federal 
Infrastructure Permitting Dashboard

    The ADOT is responsible for inputting project information for 
assigned projects into the Federal Infrastructure Permitting 
Dashboard (Dashboard), per MOU Section 8.5.1. During the audit, the 
audit team reviewed the Dashboard and found that it did not include 
Federal permit and authorization information for any of the 
applicable projects assigned to ADOT beyond NHPA Section 106 
consultation. The audit team confirmed during interviews that ADOT 
had identified the need for additional permits and authorizations 
for these projects but had not uploaded the permit information in 
the Dashboard because those activities were planned far in the 
future. Per the Office of the Secretary of Transportation Dashboard 
reporting standards, ADOT is required to identify all Federal 
permits and authorizations that are anticipated to be needed for the 
project to complete construction, and to input target and actual 
milestone completion dates for those permits and authorizations. 
Target dates for milestones shall be based upon the best available 
information. The ADOT must take corrective action to address this 
issue by the next audit.

Observation #1: Deficiencies and Gaps in ADOT's Manuals and Procedures

    The audit team reviewed ADOT's manuals and procedures. 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:
     In Audit #2, the audit team identified an observation 
that the ADOT EA/EIS Manual does not contain complete procedures for 
EA or EIS-level re-evaluations. The EA/EIS Manual instead points to 
the ADOT Categorical Exclusion (CE) Manual for direction, therefore 
the process for EA/EIS re-evaluations continues to be incomplete and 
not well-defined. The FHWA requested the correction of the EA or 
EIS-level re-evaluation section of the EA/EIS Manual in Audit #2. To 
date, ADOT has not made the correction as requested by FHWA, 
therefore, this is a continuing observation.
     The ADOT EA/EIS Manual and the current 2017 ADOT Public 
Involvement Plan approved prior to NEPA assignment do not contain 
procedures detailing the criteria ADOT uses to make the 
determination on when to hold public hearings for EA-level projects 
and what criteria will be used to make determinations on whether to 
hold a public hearing when one is requested, as specified in 23 CFR 
771.111(h)(2)(iii). The ADOT has indicated in its response to the 
PAIR and in interviews that they are in the process of updating the 
ADOT Public Involvement Plan to include more specificity on, and 
fulfilling the requirements for, public involvement under NEPA. The 
procedures should also be referenced in the ADOT EA/EIS Manual.
    The ADOT acknowledged the need for improvement regarding 
manuals/guidance and version control. The FHWA recommended that ADOT 
revisit their current procedures for updating manuals/guidance, from 
use of amendment tables to use of document dates to reflect the 
latest/most current version.

Observation #2: Improvements to Tribal Engagement Warranted

    Interviews with ADOT staff and THPOs identified the need for 
improvements to Tribal consultation practices. The THPOs expressed 
frustration that ADOT's approach to engagement with the Tribes was 
lacking outside of Section 106, and engagement completed under 
Section 106 did not constitute meaningful engagement.
    The ADOT should develop procedures that identify their 
responsibilities to coordinate and consult with Tribes in all phases 
of project development from planning through construction. The FHWA 
recommends:
     ADOT improve transparency regarding project 
information;
     ADOT provide the Tribes with any SHPO Section 4(f) 
consultation as part of the Tribal consultation package for 
individual projects; and
     All ADOT personnel with visibility on projects or who 
participate in meetings with Tribes complete sensitivity training as 
well as training regarding the Federal Government's relationship to 
Tribes under Government-to-Government consultation, per MOU Section 
3.2.3.
    The FHWA recommendations listed above are outlined in the FHWA/
ADOT Tribal Consultation Letter Agreement executed on August 5, 
2022. The ADOT accepted FHWA's recommendations and added a Tribal 
Liaison position.

Non-Compliance Observation #2: Responsibilities Under the 327 MOU 
Assigned to Additional Divisions Independent of ADOT EP

    Based on interviews of ADOT staff, the PAIR responses, and 
review of ADOT's 327 application, it was identified that ADOT 
divisions outside of EP have responsibilities under NEPA Assignment. 
These divisions have not been identified or addressed in the ADOT EP 
procedures, manuals, or plans. These responsibilities include 
environmental commitment tracking, environmental review in the 
field, and completion of the necessary training associated with 
those responsibilities. The ADOT must take corrective actions to 
develop and implement procedures to apply the 327 MOU provisions to 
all divisions of ADOT, per MOU Section 1.1.2 and ADOT Final 
Application for Assumption of FHWA NEPA Responsibilities, by the 
next audit.

Non-Compliance Observation #3: Deficiencies in Environmental Commitment 
Tracking

    The ADOT was unable to provide FHWA with a process manual or any 
type of consolidated report which documents the tracking of 
environmental commitments made during the environmental review 
process. The ADOT was unable to identify a meaningful tracking and 
monitoring system for environmental commitments and mitigation 
compliance. The ADOT has stated that this NEPA requirement is the 
responsibility of the ADOT district offices, which are outside the 
supervisory authority of ADOT's EP Office. Per MOU Section 1.1.2 and 
the ADOT Final Application for Assumption of FHWA NEPA 
Responsibilities, ADOT is responsible for environmental commitment 
tracking and all divisions that have identified and assumed FHWA 
NEPA responsibilities must comply with all provisions of the 327 MOU 
and ADOT's NEPA application requesting assignment. The ADOT must 
take corrective actions to address the tracking of environmental 
commitments and mitigation compliance by the next audit.
    The ADOT does complete monitoring of environmental commitments 
associated with contractor responsibilities that have funding line 
items. This is completed using their Field Automated System (FAST) 
payment system, but that is only a small subset of project 
commitments. The ADOT EP has begun taking measures to establish a 
procedure or mechanism for tracking environmental commitments and 
mitigation compliance, including hiring an Environmental Commitments 
Coordinator and through development of the Environmental, Permits, 
Issues, and Commitments Tracking sheet.

Documentation and Records Management

Successful Practice #2

    The ADOT staff identified a Historic Preservation Team tracking 
spreadsheet maintained by ADOT's Cultural Resources Program Manager. 
This spreadsheet is used to track and verify that all cultural 
resource environmental commitments on projects are implemented from 
identification to completion. If ADOT finds this tracking method to 
be effective, they could consider implementing it more widely to 
other environmental commitments throughout their program.

Observations

Non-Compliance Observation #4: Incomplete Project File Submission and 
Standard Folder Structure Issues

    Pursuant to MOU Sections 8.2.2 and 8.2.3, FHWA requested all 
project files pertaining to the NEPA approvals and documented NEPA 
decision points to be completed during the audit review period. The 
audit team found several inconsistencies between ADOT's procedures 
for maintaining project files and the project file documentation 
provided to FHWA. The FHWA continues to experience issues when 
attempting to access the files ADOT provided for the audit, as they 
are either not in a format that can be

[[Page 54955]]

opened, or they are inaccessible because they are saved as a link to 
the internal ADOT system and not the actual document. The MOU 
Sections 11.1.2 and 11.1.3 detail ADOT's responsibilities to provide 
FHWA any information FHWA reasonably considers necessary to ensure 
that ADOT is adequately carrying out the responsibilities assigned, 
and ADOT's agreement to cooperate with FHWA in conducting audits 
including providing access to all necessary information.
    The ADOT's procedures specify utilizing a standard folder 
structure for all projects and saving all project documentation and 
supporting information in the project files. The project files 
submitted by ADOT were incomplete, did not include all supporting 
documentation, and the files were not organized in accordance with 
the ADOT standard folder structure. It is unclear how ADOT is 
maintaining electronic project files and administrative records in 
compliance with its procedures and the terms of the 23 U.S.C. 327 
MOU as they apply to records retention. The ADOT must take 
corrective action by the time of the next audit to ensure that the 
complete project file is provided to FHWA upon request. The 
documentation must support all determinations made. It is FHWA's 
expectation that documentation to support a project's decision will 
be included in ADOT's project files. The ADOT will also provide 
complete documentation to FHWA upon request.

Observation #3: Minor Edits Needed To Resolve Deficiency 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. The ADOT's Section 4(f) Manual (Sections 5.2 and 5.3) specify 
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. 
In Audit #2, the audit team observed similar inconsistencies during 
the project file reviews and identified procedural deficiencies 
relating to ADOT's Section 4(f) evaluation and documentation. In 
response to the Audit #2 finding, ADOT updated their Section 106 
Federal-aid Programmatic Agreement Manual (which also contains the 
Section 4(f) guidance) with new preservation in place language. The 
FHWA recommends the following edits to the new language (identified 
in italics and strikeouts):
    ``By law, transportation projects involving federal actions and/
or funding require assessment in accordance with Section 4(f) of the 
Department of Transportation Act (PL 89-670) and its implementing 
regulations at 23 CFR part 774. In compliance with this statute, 
ADOT is obligated to assess archaeological sites from a purely 
Western, science-based perspective. In doing so, ADOT has found that 
Site X derives its primary statutory importance from its data 
potential, the nature and extent of which do not warrant 
preservation in place. If your office has no objection to this 
finding, ADOT will determine, in accordance with 23 CFR 774.13, that 
site X meets the archaeological exception from Section 4(f) 
consideration. ADOT understands and acknowledges that while legally 
necessary, Western approaches to the identification, interpretation, 
and valuation of archaeological sites Native American places are but 
one of many voices regarding the significance of these resources. As 
part of the ongoing Section 106 consultation process, ADOT has 
sought, and continues to seek information from the State Historic 
Preservation Office (SHPO), Section 106 Consulting Parties, Tribes, 
and the public, as necessary, affiliated tribes with regard to this 
and other affected cultural resources.''

Observation #4: Continued Improvement in Air Quality Conformity 
Communication

    The ADOT has made progress regarding the level of communication 
and coordination with FHWA on project-level air quality conformity 
analysis. The ADOT should continue to build on that progress and 
keep the lines of communication open among all the interagency 
consultation partners. It would be good practice for ADOT to share 
re-evaluations requiring conformity determinations with interagency 
consultation partners for their input before requesting an FHWA 
conformity determination.

Observation #5: Inconsistent Use and Absence of the 327 MOU Disclosure 
Statement

    Section 3.1.3 of the MOU specifies that ADOT shall disclose the 
disclosure statement to the public, Tribes, and agencies as part of 
agency outreach and public involvement procedures. The audit team 
project file reviews found inconsistent use of the disclosure 
statement on agency correspondence and technical reports, as well as 
absence of the statement in public involvement materials. The audit 
team found no consistent process or procedure for inclusion of the 
327 MOU disclosure statement in the ADOT manuals/guidance as 
required by MOU Section 3.1.3. The ADOT should strive to achieve 
consistency in the placement of disclosure statements in documents.

Non-Compliance Observation #5: Deficiencies in Analysis of 
Environmental Impacts on Low-Income and Minority Populations 
(Environmental Justice)

    The ADOT's EA/EIS Manual, CE Manual, and FHWA E.O., policies, 
and guidance provide information on completing the environmental 
justice analysis required for projects. The FHWA identified 
inconsistencies in ADOT's Section EA/EIS Manual, CE Manual, PAIR 
response, and interview responses regarding how ADOT completes 
environmental justice analyses. The methodology described by ADOT is 
not in compliance with FHWA policy and guidance because ADOT 
analyzes the effect prior to identifying environmental justice 
populations in the project area. In addition, the CE Manual 
describes evaluating census data, but no additional sources for 
environmental justice population identification. The CE Manual also 
infers a default position that there will be no disproportionately 
high and adverse impacts on low-income or minority populations with 
CE-level projects. The audit team observed similar inconsistencies 
during the project file reviews for this audit and identified the 
same environmental justice analysis procedural deficiencies in the 
project documentation, as well as project files with little or no 
analysis documentation. In addition, there were inconsistent degrees 
of coordination with the ADOT CRO, who, according to the CE Manual 
and the PAIR response, is to be consulted on all environmental 
justice analyses. Based on these findings and a review of the ADOT 
Training Plan, additional environmental justice training is needed, 
and ADOT's manuals and procedures should be brought into compliance 
with FHWA requirements. The ADOT must take corrective action to 
ensure that environmental justice analysis and assessments are in 
compliance with E.O. 12898, DOT Order 5610.2C, and FHWA policy and 
guidance by the next audit.

Quality Assurance/Quality Control

Observations

Observation #6: QA/QC Procedures Lack Assessment of Compliance

    The ADOT has procedures in place for QA/QC which are described 
in the ADOT QA/QC Plan and the ADOT Project Development Procedures. 
When implemented, ADOT focuses on completeness of the project files, 
not the accuracy or technical merits of the decisions documented by 
those files. The ADOT does not check for compliance of the 
decisionmaking and it is therefore unclear how the project-level QC 
reviews inform the program. These observations were also found with 
Audits #1 and #2. The audit team continues to be unable to fully 
assess the implementation of project-level QC procedures. The ADOT 
does not appear to have a process in place for assessing the 
effectiveness of its QA/QC procedures to identify opportunities to 
improve the processes and procedures in their program, in ways that 
could help ensure better compliance with MOU requirements.

Observation #7: QA/QC Procedures Do Not Inform the Performance Measures

    It is unclear how the QA/QC procedures, such as the use of QC 
checklists, are informing ADOT about the technical adequacy of the 
environmental analyses conducted for projects (MOU Section 
10.2.1.B.c) and how the timing of QA/QC reviews influences 
timeliness and efficiency in completion of the NEPA analysis. The 
QA/QC process as documented does not include a review of the 
adequacy of the technical analyses completed. The current 
performance measures do not provide QA/QC completion dates to create 
meaningful datasets that allow assessment of the timeliness of QA/QC 
actions. The FHWA recommends that a column be added to the current 
performance data matrix that measures the adequacy of technical 
documentation, as well as date columns for the completion of the 
draft QC, final QC, and QA checklists.

[[Page 54956]]

Performance Measures

Successful Practice #3

    The ADOT Environmental Programs Manager identified team-level 
internal performance measures used by ADOT EP to track timelines on 
biological decisions, improve coordination with U.S. Fish and 
Wildlife Service, and inform the prioritization of projects. The 
ADOT EP has made beneficial documentation changes based on these 
internal leading performance measures for the quality and timeliness 
of biological consultation. These could serve as an example of 
meaningful metrics that could be integrated into the performance 
measures that ADOT is currently tracking.

Observations

Observation #8: 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 and 
reported the data for the review period. The ADOT's reporting data 
primarily dealt with increasing efficiencies and reducing project 
delivery schedules rather than 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 used to provide a meaningful or comprehensive evaluation of 
the overall program. The FHWA was unable to determine how the ADOT 
QA/QC process is informing the improvement of the NEPA procedures 
used by ADOT, nor how it demonstrates meeting their performance 
measures. One area of concern is the lack of dates on key actions 
and when determinations are made. The FHWA recommends that ADOT 
evaluate the current performance measures matrix of other NEPA 
Assignment States DOTs (such as Utah and Ohio) to assist in making 
meaningful changes in their current performance measures tracking. 
This observation was also made in Audit #1 and Audit #2.

Legal Sufficiency

    The ADOT had completed one formal legal sufficiency review of an 
assigned environmental document during the audit period. The EIS 
received a formal legal sufficiency finding, which was included in 
the project file. Currently, ADOT retains the services of two 
Assistant Attorneys General (AAG) for NEPA Assignment reviews and 
related matters. The assigned AAGs have received formal and informal 
training in environmental law matters. The ADOT and the AGO also 
have the option to procure outside counsel in accordance with 23 
U.S.C. 327(a)(2)(G), but this was not necessary during the audit 
period.

Successful Practice #4

    The ADOT seeks to involve 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 from 
ADOT's NEPA program manager containing a request for legal 
sufficiency review. Various ADOT manuals set forth legal sufficiency 
review periods, and the AAGs coordinate with ADOT to ensure timely 
completion of legal sufficiency reviews. In addition, one of the 
AAGs has recently taken an active role in Tribal matters, including 
participating in meetings with Tribes and handling legal questions 
related to Tribal issues.

Training

Observation #9: Training Gaps

    The audit team reviewed ADOT's 2021 Training Plan and ADOT's 
PAIR responses pertaining to its training program. The ADOT's EP 
staff training matrix indicates that, while ADOT identifies the 
availability of staff needing training, many staff have not taken 
advantage of the opportunity for training, including other ADOT 
divisions subject to the 327 MOU provisions. The ADOT's training 
plan identifies that the training interval for some topics, such as 
the NEPA Assignment Program, is only once per staff member 
regardless of the period of time since the previous round of 
training. Staff may benefit from regular ``refresher'' type 
training, especially as regulatory requirements and policy may 
change over time.

Status of Previous General Observations and Non-Compliance Observations 
From the Audit #2 Report

    This section describes the actions ADOT has taken (or is taking) 
in response to observations made during the second audit. The ADOT 
was provided the second audit draft report for review and provided 
comments to FHWA on August 2, 2021.

Observation #1: Deficiencies and Gaps in ADOT's Manuals and Procedures

    During Audit #2, the audit team identified deficiencies in 
ADOT's manuals and procedures which may result in incomplete project 
documentation or analysis and increase the risk for non-compliance. 
The first was in the ADOT CE Checklist Manual and the EA/EIS Manual, 
specifically the process for re-evaluations for EAs and EISs was not 
well-defined. Although the team observed some improvements to the 
manuals in Audit #3, the deficiency identified in Audit #2 was not 
resolved and is an observation again in Audit #3. The other was the 
ADOT Section 4(f) Manual, documentation forms, and desk reference/
matrix containing information inconsistent with FHWA guidance and 
regulation. The deficiencies identified in Audit #2 were addressed 
by ADOT, but additional issues were identified by the audit team in 
Audit #3.

Non-Compliance Observation #1: Deficiencies in Section 4(f) Evaluation 
of Archaeological Resources

    The audit team observed similar inconsistencies as were observed 
in Audit #1 during the project file reviews for Audit #2 and 
identified procedural deficiencies relating to ADOT's Section 4(f) 
evaluation. The consultation letter sent to the Arizona SHPO did not 
state ADOT's intent to apply the archaeological exception to sites 
or include other Section 4(f) information regarding the sites 
identified. In Audit #3, the audit team acknowledges changes were 
made to ADOT's Section 106 Federal-aid Programmatic Agreement 
Manual, but FHWA provided corrections to the draft language for ADOT 
to incorporate.

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 
for how early property acquisitions should be considered with the 
right-of-way impacts analysis. In Audit #2 for the 327 MOU, the 
audit team found 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 ADOT 
submitted a letter to FHWA on April 28, 2022, detailing the steps 
ADOT will take within 60 days as a corrective action to address the 
right-of-way non-compliance observation. On May 23, 2022, ADOT 
submitted to FHWA updated procedures regarding right-of-way impacts 
in their NEPA analyses and FHWA provided technical assistance to 
ADOT regarding these procedures. This corrective action by ADOT 
resolves the non-compliance observation.

Observation #3: Inconsistencies in Interagency Consultation 
Documentation

    After completing the project file review in Audit #2, 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. During Audit #3, 
the audit team found an increased amount of documentation providing 
evidence of interagency consultation efforts by ADOT in the project 
files reviewed.

Observation #4: Incomplete Development and Implementation of 
Performance Measures

    During Audit #2, the audit team reviewed ADOT's performance 
measures and reporting data submitted for the review period and 
concluded that ADOT had made progress toward developing and 
implementing its performance measures. For Audit #3, FHWA continues 
to identify this program objective as an area of concern, described 
in the

[[Page 54957]]

observations above, and will continue to evaluate this area in 
subsequent audits.

Finalizing This Report

    The FHWA provided a draft of the audit report to ADOT for a 14-
day review and comment period, as well as notification of the non-
compliance observations. The ADOT provided comments which the audit 
team considered in finalizing the 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. The FHWA is publishing this notice in the 
Federal Register for the final audit report. The FHWA considered 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. 2024-14501 Filed 7-1-24; 8:45 am]
BILLING CODE 4910-22-P